BS: Gold Futures Drop on Sales Following Two-Day Rally to Record
By Pham-Duy Nguyen
May 13 (Bloomberg) -- Gold futures fell on sales by some investors following a two-day surge to a record amid turmoil in European debt markets.
“Gold is due for a breather,” said Matt Zeman, a metal trader at LaSalle Futures Group in Chicago. “People are taking profit, but it’s still a buy-the-dips market.”
The 14-day relative-strength index for gold was above 70 for the third straight day, a signal that futures may fall. The price reached an all-time high of $1,249.20 an ounce yesterday as demand for gold coins surged and holdings in exchange-traded funds backed by the metal reached records.
Gold futures for June delivery fell $4.50, or 0.4 percent, to $1,238.60 an ounce at 10:12 a.m. on the Comex in New York. Before today, gold rallied 13 percent this year after posting nine straight annual gains.
Asian equities climbed the most in two months as company earnings reports boosted investor confidence.
“Some people may be breathing a little easier, and that’s taking the wind out of gold’s sails,” Zeman said.
Gold denominated in euros, British pounds and Swiss francs has climbed to records. European governments are seeking austerity measures after policy makers and the International Monetary Fund pledged almost $1 trillion to rescue indebted nations.
Before today, the euro, which generally has moved in tandem with gold as an alternative to holding dollars, has plunged 12 percent this year.
Europe ‘Scared’
“All the buying has come out of Europe,” said Leonard Kaplan, the president of Prospector Asset Management. “People in Europe are scared. Their problems are not going away soon.”
Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, have advanced 6.7 percent this year to a record.
Silver futures for July delivery were little changed at $19.645 an ounce on the Comex.
Platinum futures for July delivery dropped $12, or 0.7 percent, to $1,735.30 an ounce on the New York Mercantile Exchange. Palladium futures for June delivery declined $1.45, or 0.3 percent, to $546 an ounce.
--With assistance by Nicholas Larkin in London. Editors: Patrick McKiernan, Daniel Enoch
To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.
To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net
