MW: Gold falls as investors react to earnings reports
Gold futures fell slightly on Wednesday, reversing early losses, as investors looked past worse-than-expected from aluminum giant Alcoa Inc. and cheered reports of more government help to insurers, reducing demand for safe assets.
Gold for April delivery was down $3.0, or 0.3%, at $879.20 an ounce.
In gold exchange-traded funds, holdings in SPDR Gold Shares , the biggest gold exchange-traded fund, stood at 1,127.37 tons Tuesday, unchanged for a third session, according to latest data from the fund. The gold exchange traded fund recently fell 0.2% to $86.5.
On Wall Street, the Dow Jones Industrial Average rose 0.3% and the S&P 500 gained 2 points to 817. After two days of losses, during which investors discounted what's expected to be a bad earnings season, Alcoa ) gained 1.2% after posting worse-than-expected results.
Investors were also heartened after a Wall Street Journal report that the Treasury Department has decided to extend bailout funds to several struggling life insurers.
Gold had opened higher as bargain hunters entered the market after the precious metal slumped 6% in three sessions through Monday.
Gold is "in a continued upward move as more bargain hunting ensues," said George Gero, a precious metals trader for RBC Capital Markets.
Alcoa, the world's largest aluminum producer, kicked off the earnings season late Tuesday by reporting a first-quarter net loss of $497 million, or 61 cents a share, a reversal from a profit of $303 million, or 37 cents a share, generated during the first three months of 2008. See full story.
Earnings of S&P 500 companies are expected to decline by 36.7% from a year ago, according to Thomson Reuters.
Earnings-related nervousness could help strengthen gold's appeal as a safe haven, said James Moore, a precious metals analyst at TheBullionDesk.com.
"But with SPDR holdings unchanged for the third consecutive day the yellow metal may have to test lower to encourage sizeable investment flows," he added.
Gold prices have come under selling pressure in the last week, partly out of optimism that collective actions by leaders of the world's major nations may stem the global economic crisis.
Despite the two days' gain, gold is still about $120 lower than its February high above $1,000.
In other metals futures, silver for May delivery rose 0.5% to $12.27 an ounce. June palladium was up 2% at $230.65 an ounce, while July platinum gained 1% to $1,187.0 an ounce.
May copper rose 0.1% to $1.99 a pound.
