BLBG: Gold Extends Decline as Investors Sell After Rally to Record
By Kim Kyoungwha
May 20 (Bloomberg) -- Gold fell, extending the steepest decline in more than three months, as some investors opted to sell their holdings after a recent rally to record.
Gold for immediate delivery fell as much as 1 percent to $1,182.35 an ounce and traded at $1,186 at 2:43 p.m. in Singapore, overturning an earlier gain. The metal slumped 2.6 percent yesterday, the most since Feb. 4. June futures in New York also dropped as much as 1 percent.
“There may be some lingering weakness in gold after yesterday’s selloff,” said Wong Eng Soon, an analyst at Phillip Futures Pte Ltd. “We foresee gold falling again to the $1,180 to $1,185 level on an intraday basis before recovering.”
Gold rallied this quarter, touching an all-time high of $1,249.40 an ounce on May 14, as investors sought to protect their wealth from Europe’s financial turbulence. Gold holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, increased 3.04 metric tons to a record 1,220.15 tons yesterday, according to figures on the company’s website.
“People are reducing their long positions on metals,” said Paul Yamamura, a Tokyo-based trader at Sumitomo Corp., referring to bets on price gains. “Considering the volume in exchange-traded funds, gold could be vulnerable.”
The euro fell against the dollar, taking this year’s loss to 14 percent, on concern that Europe’s economic recovery will slow as governments cut spending amid the region’s debt crisis. German Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble will host talks on financial regulation today in Berlin before a Group of 20 summit next month in Canada.
‘Still Up’
“The megatrend is still up but the market needs to go through some minor correction,” said Wallace Ng, executive director at Fortis Nederland NV in Hong Kong. “We will see more profit-taking on recent gains.”
Gold prices will likely rise further as investors, concerned that European monetary expansion will spur inflation, seek a haven, Aram Shishmanian, chief executive officer of the producer-funded World Gold Council, said yesterday.
Gold will also climb as supply fails to meet growing demand from exchange-traded funds and the jewelry and nanotechnology industries, Shishmanian said in an interview in Lima, Peru.
Silver for immediate delivery weakened 1.4 percent to $17.9625 an ounce, while palladium and platinum slumped to the lowest levels since March 2. Palladium for immediate delivery slid as much as 5.3 percent to $435.38 an ounce before trading at $444.88 and platinum shed as much as 2.6 percent to $1,560.50 an ounce.
To contact the reporter on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net
