BS: Gold Falls to 8-Week Low in New York as Investor Demand Wanes
July 20 (Bloomberg) -- Gold declined to an eight-week low in New York on speculation investor demand for the metal as a protection of wealth will dampen.
The metal is trading 7 percent below a record set last month. The dollar was 0.6 percent higher against the euro before stress-test results this week from European banks. The U.S. currency earlier slipped to the lowest level since May 10.
“Gold’s safe-haven appeal has started evaporating following a strong rebound in the euro,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said today in a report. “Unless we see a renewed flight for safety, it is unlikely that gold would retest the June highs anytime soon.”
Gold futures for August delivery lost as much as $5.70, or 0.5 percent, to $1,176.20 an ounce on the Comex in New York, the lowest price since May 21. They traded at $1,177.70 at 8:05 a.m. local time. Gold for immediate delivery in London was 0.4 percent lower at $1,177.90.
Bullion was little changed at $1,181.50 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,181 at yesterday’s afternoon fixing.
European regulators are examining the strength of 91 banks to determine whether they can survive potential losses on sovereign-debt holdings. Results will be released July 23. Spanish officials including Finance Minister Elena Salgado said last week they’re confident about the results of the stress tests on Spanish banks.
Ireland Rating Cut
Gold gained with the dollar in the previous three quarters as the euro slumped 16 percent in the period against the greenback. Bullion futures, which typically move inversely to the U.S. currency, climbed to a record $1,266.50 on June 21 as investors sought to protect their wealth against the debt crisis in Greece and other European nations struggling to repay debt, and on concern that the global recovery may slow.
Moody’s Investors Service cut Ireland’s credit ranking one level to Aa2 yesterday, citing a “significant loss of financial strength” and the cost of bank bailouts.
Assets in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, were unchanged for a second day at 1,314.21 metric tons yesterday, according to the company’s website. Global holdings of the metal by ETFs rose 1.6 tons to a record 2,078.1 tons yesterday, according to Bloomberg data from 10 providers.
When prices fell below $1,190 on July 16 “the buying response from the traditional physical hubs was quite significant and volumes to India were the sixth largest our sales desk in Switzerland experienced so far this year,” UBS AG analyst Edel Tully said today in a report. “Physical buyers are prepared to buy gold on a day when the metal experiences a large intraday negative swing.”
Silver Slides
Russia’s central bank added 200,000 ounces to its gold reserves last month, increasing its stockpile to 22.8 million ounces (709.2 tons), it said today in an e-mailed statement.
Silver for September delivery in New York fell 0.3 percent to $17.49 an ounce. Platinum for October delivery declined 1 percent to $1,498 an ounce. Palladium for September delivery dropped 1.7 percent to $436.50 an ounce.
--With assistance from Paul Abelsky in Moscow. Editors: John Deane, Dan Weeks.
To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net.
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.
