BLBG:Gold May Decline as Concern Over European Debt Bolsters Dollar
Gold may drop for a second day on concern Europe’s debt crisis may worsen, supporting the dollar. Silver traded near a three-month low after holdings in exchange- traded products fell the most in more than four years.
Spot gold lost as much as 0.3 percent to $1,633.98 an ounce and traded at $1,637.17 at 3:23 p.m. in Singapore. It fell to $1,623.55 yesterday, the lowest level since April 5, on concern the political climate in the Netherlands and France may complicate Europe’s struggle to contain the debt crisis.
Dutch Prime Minister Mark Rutte speaks in parliament today after tendering his Cabinet’s resignation to break a deadlock over further austerity. French President Nicolas Sarkozy and Francois Hollande will face off in a second-round ballot May 6. Hollande said yesterday that austerity was fueling despair.
“Concerns rose on the outcome of Dutch and French elections and the impact they will have on the ongoing European debt crisis,” Lachlan Shaw, an analyst at Commonwealth Bank of Australia, wrote in an e-mail today.
The level of government debt of the euro region rose to 87.2 percent of gross domestic product last year, the highest since the start of the single currency in 1999, data yesterday showed. Manufacturing in the euro area and China contracted, separate reports showed yesterday.
June-delivery bullion climbed 0.3 percent to $1,637.90 an ounce on the Comex in New York, after declining to a two-week low yesterday. Bullion of 99.99 percent purity dropped to 331.65 yuan a gram ($1,643.07 an ounce), the lowest price since April 6.
Dollar’s Climb
“Gold slipped as the U.S. dollar strengthened,” wrote Shaw. The dollar rose as much as 0.6 percent against a six- currency basket yesterday. Gold typically trades counter to the U.S. currency.
Spot silver traded little changed at $30.8825 an ounce after dropping to $30.48 yesterday, the lowest price since Jan. 20. Holdings in exchange-traded products contracted 3.6 percent yesterday, the biggest one-day decline since January 2008.
Cash platinum fell for a second day, dropping as much as 0.6 percent to a three-month low of $1,550.50 an ounce and driving its ratio to gold to the lowest in two months. It was last at $1,557.50.
Palladium, this year’s worst-performing precious metal, was little changed at $673.25 an ounce.
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
