MW: Gold falls on optimism crisis may have bottomed
Gold futures fell Thursday, as optimism that global leaders meeting in London are taking measures to tackle the global financial and economic crisis curbed back investors' need to seek safe assets, such as gold.
Gold prices still remained supported by a weaker dollar, which came under selling pressure against the euro after the European Central Bank cut interest rates by a smaller than expected amount. Gold, a dollar-denominated asset, is more attractive to holders of other currencies when the dollar falls.
Gold for April delivery fell $11.60, or 1.3%, to $914.50 an ounce on the Comex division of the New York Mercantile Exchange. The more active June contract lost $13, or 1.4%, to $914.70.
Gold fell as "risk appetite returns with stocks surging internationally," said Mark O'Byrne, executive director at Gold and Silver Investments. "People are expecting the G20 summit can help pull the global economy out of trouble."
Leaders from the world's most powerful and emerging countries were working toward an agreement to at least double the International Monetary Fund's rescue capabilities and to sanction countries that fail to comply with a crackdown on bank secrecy rules.
Progress on those issues comes as disputes over the need for additional fiscal stimulus spending and measures to strengthen international oversight of the financial sector threatened to dominate the crisis summit of Group of 20 leaders. See full story.
Thursday's losses in gold reversed the metal's gains in the previous two sessions. The metal is now down 1.4% so far this week.
Investment in gold exchange-traded funds also stalled. Holdings in SPDR Gold Shares , the biggest gold exchange-traded fund, stood at 1,127.44 tons on March 31, unchanged for a third session, according to latest data from the fund.
Gold found a floor, however, thanks to a weaker dollar. The greenback fell sharply against the euro after the ECB cut its key interest rate to 1.25%, a fresh record low but a smaller-than-expected cut that stunned markets. See full story.
Meanwhile, first-time claims for state unemployment benefits rose a seasonally adjusted 12,000 in the week ended March 28 in the U.S., hitting the highest level since October 1982, the Labor Department reported. Some investors buy gold as a safe-haven against economic troubles.
In other metals trading Thursday, silver for May delivery lost 0.5% to $12.91 an ounce. April platinum added 0.2% to $1,138.10 an ounce, and June palladium gained 0.2% to $222 an ounce.
May copper rose 1.8% to $1.882 a pound.
