BLBG:Gold Falls a 2nd Day on Speculation Stimulus Not Needed
Gold declined for a second day in London on speculation economic growth will reduce the need for the Federal Reserve to add to stimulus measures.
Three voting members of the Federal Open Market Committee said they don’t see a need to ease policy further as the economy maintains its expansion. Gold-backed exchange-traded products fell to a three-month low after prices yesterday reached a two- week high. Gold imports by India plunged to 30 to 35 metric tons in April from 90 tons a year earlier, the Bombay Bullion Association said today.
“Pockets of profit-taking have been seen,” James Moore, an analyst at TheBullionDesk.com in London, said today in a report. “Comments from several Fed officials diminished the likelihood of QE3, prompting investors to cut” gold ETP holdings, he said, referring to more quantitative easing.
Bullion for immediate delivery slipped 0.5 percent to $1,653.93 an ounce by 9:41 a.m. in London. Prices reached $1,671.57 yesterday, the highest since April 13. June-delivery futures were 0.5 percent lower at $1,654 on the Comex in New York.
Fed Bank of Richmond President Jeffrey Lacker said in Washington yesterday that more monetary stimulus risks stoking inflation while doing little to strengthen the recovery. The San Francisco Fed’s John Williams said the outlook he sees doesn’t warrant more bond buying, and Atlanta’s Dennis Lockhart repeated that he’s skeptical of the benefits of such action.
Holdings in bullion-backed ETPs fell 4.1 tons to 2,381.6 tons yesterday, data compiled by Bloomberg show. Assets are about 1.2 percent below the March 13 record and the lowest since Feb. 1. Prices are up 5.7 percent in 2012 after advancing for 11 consecutive years.
‘Aimless’ Bullion
“Significant ETF buying will have to resume in order to breathe some life back into gold,” Edel Tully, an analyst at UBS AG in London, wrote today in a report. “Absent that resuscitating factor, we think gold is likely to continue its aimless wander.”
Silver for immediate delivery dropped 0.7 percent to $30.7675 an ounce. Palladium fell 0.8 percent to $675.25 an ounce, after reaching $686.75 yesterday, the highest level since March 22. Platinum was 0.4 percent lower at $1,565.50 an ounce.
To contact the reporters 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
