BLBG:Gold Drops as Some Investors Sell Following Advance to Near Record Price
Gold declined in London as some investors sold the metal after prices this week climbed to a one-month high and near a record.
Gold this week traded within 1.6 percent of a record. Prices were little changed yesterday after the European Central Bank signaled its approval of Greek bond rollovers. Federal Reserve Chairman Ben S. Bernanke yesterday said the “frustratingly slow” U.S. recovery warrants sustained monetary stimulus while predicting that growth will gain speed in the second half of the year.
“We’ve seen a bit of profit taking,” said Afshin Nabavi, a senior vice president at MKS Finance SA, a bullion refiner in Geneva. Still, “the situation in the U.S. and Europe continues to not be very promising. We’re heading for much higher prices in the medium term. We just need a trigger.”
Immediate-delivery gold declined $7.15, or 0.5 percent, to $1,537 an ounce by 11:18 a.m. in London. The metal reached $1,553.65 on June 6, the highest price since May 2. Gold for August delivery was down 0.4 percent at $1,537.70 an ounce on the Comex in New York.
Bullion fell to $1,535.50 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,545 at yesterday’s afternoon fixing.
Gold is up 8.2 percent in 2011 after climbing the past 10 years, the longest run of gains in at least nine decades. Europe’s debt crisis helped bullion reach a record $1,577.57 on May 2. German Finance Minister Wolfgang Schaeuble said bondholders must contribute a “substantial” share of a second aid package for Greece, proposing a swap that credit-rating companies may term a default.
Spurred Growth
Bernanke has spurred growth by holding the main interest rate near zero since December 2008 and expanding the Fed’s balance sheet to $2.79 trillion. The Fed said in April it will complete a program to purchase $600 billion in bonds this month, a policy known as quantitative easing, and affirmed a pledge to keep interest rates low for an “extended period.”
The ECB meets on June 9 and is forecast to leave its benchmark rate at 1.25 percent, according to economists in a Bloomberg survey. The central bank may increase borrowing costs by 25 basis points in July, a separate survey showed.
“Gold could see fresh interest if the ECB signals to keep rates on hold as precious metals benefit from a low interest rate environment,” Stefan Graber, an analyst at Credit Suisse Group AG, wrote in a report. “The overall direction of gold remains firmly up.”
Silver for immediate delivery fell 2.1 percent to $36.385 an ounce in London. Palladium declined 1 percent to $800.75 an ounce. The metal yesterday climbed to a three-month high of $810.50. Platinum was down 0.9 percent at $1,817.65 an ounce.
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
