BS: Gold Futures Decline to Six-Week Low as U.S. Equities Advance
By Pham-Duy Nguyen
July 7 (Bloomberg) -- Gold futures fell to a six-week low as a rally in equities erodes demand for the precious metal as an alternative investment.
The Standard & Poor’s 500 Index rose for the second straight day after a report showed that retail sales are growing at the fastest pace in four years. Assets in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, dropped for the third session in a row. Gold has declined 5.8 percent from a record $1,266.50 an ounce on June 21.
“The money that found its way into gold’s coffers is looking for other places,” said Matt Zeman, a trader at LaSalle Futures Group in Chicago. “More people are betting on a higher stock market. There’s just a lack of buying interest for gold.”
Gold futures for August delivery fell $2.30, or 0.2 percent, to $1,192.80 at 10:24 a.m. on the Comex in New York. Earlier, the price touched $1,185, the lowest level for a most- active contract since May 24. Before today, the metal gained 9 percent this year.
Gold demand in China gained in the first half as government measures to cool the property market and falling equities spurred purchases, Song Yuqin, a vice general manager at the Shanghai Gold Exchange, said today at a conference in Beijing.
Gold is unlikely to become a major holding in China’s foreign reserves because of wide price swings and a lack of interest payments, China’s State Administration of Foreign Exchange said in a statement. China will “carefully consider” whether to raise or reduce the amount of gold it has, the regulator said.
China’s Holdings
China is the sixth-largest holder of gold among governments with 1,054.1 metric tons. The metal makes up about 1.6 percent of the country’s foreign reserves. China purchased 454 tons from 2003 to 2009, according to the producer-funded World Gold Council.
Silver futures for September delivery dropped 8.7 cents, or 0.5 percent, to $17.77 an ounce on the Comex.
Platinum futures for October delivery fell $4.30, or 0.3 percent, to $1,514.40 an ounce on the New York Mercantile Exchange.
Palladium futures for September delivery rose $1.05, or 0.2 percent, to $441.45 an ounce.
--With assistance from Belinda Cao in Beijing. 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
