BS: Gold Falls as Euro, Equities Gain, Eroding Demand for Haven
By Pham-Duy Nguyen
June 9 (Bloomberg) -- Gold prices fell the most in three weeks, extending a decline from a record, as the euro and global equities rebounded, eroding the precious metal’s appeal as a haven.
Yesterday, gold futures climbed to an all-time high of $1,254.50 an ounce amid mounting concern that Europe’s debt woes would spread. Before today, the metal gained 14 percent this year.
“Gold looks tired up here,” said Leonard Kaplan, the president of Prospector Asset Management in Evanston, Illinois. “The question is how low will it go.”
Gold futures for delivery in August fell $19.70, or 1.6 percent, to $1,225.90 at 11:19 a.m. on the Comex in New York. A close at that price would mark the biggest drop for a most- active contract since May 19. Earlier, the price touched $1,223.10, down 2.5 percent from the record.
Yesterday, gold priced in euros, U.K. pounds and Swiss francs surged to records on demand for a store of value. The euro rose as much as 0.8 percent today before the European Central Bank announces a decision tomorrow on interest rates. The MSCI World Index of equities climbed as much as 1.4 percent.
The metal might drop as low as $1,200 this week after failing to close above $1,250, said Dennis Gartman, an economist and the editor of the Suffolk, Virginia-based Gartman Letter.
“Good bull markets advance to important levels, consolidate for an hour or two and then push through those levels with impunity,” Gartman said. “This time, it has not, and we find that a bit discouraging.”
‘Sharp’ Drop Foreseen
The metal may face a “sharp” drop soon, Royal Bank of Scotland Group Plc said in a report.
“The physical market is unlikely to provide much support for gold over the summer months, typically the seasonally weakest for jewelry demand,” Royal Bank said.
Silver may increase on demand for a cheaper alternative to gold, Goldcore Ltd. in Dublin said in a report.
Silver futures for July delivery fell 33.2 cents, or 1.8 percent, to $18.145 an ounce on the Comex. Before today, the metal gained 9.7 percent this year.
Platinum futures for July delivery rose $10.90, or 0.7 percent, to $1,539.70 an ounce on the New York Mercantile Exchange. Palladium futures for September delivery jumped $11.40, or 2.6 percent, to $453.55 an ounce.
--With assistance from Nicholas Larkin in London. Editors: Patrick McKiernan, Michael Arndt
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
