BD: Gold, silver drop as debt worries push $US higher
Gold fell for the first time in three days as concern that some European governments are struggling to finance themselves boosted the dollar against the euro, eroding the metal’s appeal as an alternative asset. Silver, platinum and palladium also declined.
Immediate-delivery gold lost as much as 0.6 per cent to $US1400.72 an ounce and traded at $US1400.45. The metal, which touched an all-time high of $US1,424.60 on Nov. 9, is still set for a third weekly gain. Cash silver slipped as much as 1.9 per cent to $US27.175 an ounce.
“Gold has run up pretty high, and investors seem to be hesitant to add positions at this stage as the dollar strengthens,” said Hwang Il Doo, a senior trader at Korea Exchange Bank Futures in Seoul. “You may see a support level at around $1350, though.”
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The euro fell to a six-week low against the dollar amid concern that sovereign-debt issues will weigh on economic growth in Europe. Gross domestic product in the 16-nation euro area increased 0.5 per cent in the third quarter, after expanding 1 per cent in the previous period, according to a Bloomberg survey before the European Union’s statistics office report today.
Irish government bonds tumbled for a 13th day yesterday on mounting concern that the nation will be forced to restructure its finances. Portuguese 10-year bonds widened their yield difference, or spread, over benchmark German bunds to a record. Spanish bonds also dropped for a 13th day.
‘Negative factors’
“Market attention is switching back to negative factors for the euro,” said Naoto Minatogawa, a currency analyst at Himawari Securities in Tokyo. “People are starting to price in slowdown signs in the euro zone.”
Bullion has gained 28 per cent this year, set for a 10th annual gain, on bets the Federal Reserve’s plan to buy back more bonds will erode the value of the dollar. The metal typically moves inversely to the US currency.
Gold’s gains may be limited in the short term should the dollar extend its rally, analysts at Bank of America Merrill Lynch said yesterday in a report. The Dollar Index, which tracks its value against six counterparts, rose for a fifth day.
“A recovery of the US currency, for instance because of concerns over debt in Europe, may remove price support to metals,” Bank of America Merrill Lynch said.
December-delivery futures were little changed at $US1402.30 an ounce on the Comex in New York.
Platinum for immediate delivery retreated 1.2 per cent to $US1,734 an ounce, while spot palladium fell 1.1 per cent to $US704.50 an ounce.
