BLBG: Gold May Decline as Signs of Recovery Sap Demand, Boost Shares
Aug. 3 (Bloomberg) -- Gold may decline, snapping four days of gains, as evidence of a firmer economic rebound reduces the allure of the precious metal as a store of value while boosting demand for equities.
Gold for immediate delivery traded little changed at $1,183.85 an ounce at 9:23 a.m. in Singapore after earlier dropping as much as 0.3 percent to $1,179.55. December-delivery futures traded at $1,185.70 an ounce, 30 cents higher.
“With stock markets buoyed by optimism of the stronger economic recovery, people are willing to buy shares and sell gold,” said Wallace Ng, Hong Kong-based executive director with ABN Amro Securities Asia Ltd. “Gold could test the $1,160 level this week.”
Asian stocks climbed, driving the MSCI Asia Pacific Index to a three-month high, after U.S. manufacturing data topped forecasts and European banks reported better-than-estimated earnings. Federal Reserve Chairman Ben S. Bernanke said rising wages will probably spur household spending in the next few quarters, even as weak job gains hurt consumer confidence.
Gold has strengthened 7.9 percent this year and is set for the 10th annual advance, the longest winning streak since at least 1920 as investors sought protection against Europe’s financial turmoil, weaker currencies and concern that there may be a double-dip recession. The metal touched a record $1,265.30 an ounce last month.
Hedge funds and other large speculators increased their net-long position 5.9 percent in Comex gold futures in the week to July 27, according to U.S. Commodity Futures Trading Commission data. That marked the first increase in a month. A Bloomberg survey of 22 traders and analysts found that nine, or 41 percent, expected gold to gain this week.
Silver for immediate delivery increased 0.2 percent to $18.3925 an ounce, and palladium climbed 0.6 percent to $512 an ounce. Platinum decreased 0.4 percent to $1,595 an ounce.
--Editors: Jake Lloyd-Smith, Jarrett Banks
To contact the reporter on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net
To contact the editor responsible for this story: Jim Poole at jpoole4@bloomberg.net
