BLBG:Gold Set For Third Weekly Decline As European Risks Curb Demand
Gold dropped, headed for its third weekly decline, on signs that Europe’s crisis is worsening as concern grew about the health of Spanish banks and Fitch Ratings downgraded Greece’s credit rating, curbing demand for the metal.
Gold for immediate delivery fell as much as 0.4 percent to $1,568.03 an ounce and was at $1,570.68 at 2:49 p.m. in Singapore. The metal climbed 2.3 percent yesterday, paring this week’s loss to 0.5 percent. June-delivery bullion declined as much as 0.5 percent to $1,567.80 on the Comex in New York.
Greece’s credit rating was reduced one level on concerns the country won’t be able to muster the political support needed to sustain its membership in the euro area as leaders began campaigning ahead of a second national vote in six weeks. Moody’s Investors Service lowered debt ratings at 16 Spanish banks, citing economic weakness and the government’s mounting budget strain. It follows Moody’s May 14 downgrade of 26 Italian banks and its Feb. 13 cut of Spain’s sovereign debt.
“The fact that people are worried about European banks again is likely to have a broader, more depressing effect across all markets,” said Nick Trevethan, senior commodities strategist at Australia & New Zealand Banking Group Ltd. in Singapore. “Even though it broke away from other assets yesterday, gold is still very much traded in line with risk.”
Gold reached the lowest price this year on May 16 as Greece’s inconclusive May 6 election sparked political turmoil and reignited concern the country will renege on pledges to cut spending as required by the two separate rescue packages worth 240 billion euros ($304 billion). Almost $4 trillion has been wiped from global equity markets this month as Europe’s deepening crisis threatens the global recovery.
Holdings in bullion-backed exchange-traded products rose to 2,381.769 metric tons yesterday, data tracked by Bloomberg show.
Spot silver was little changed at $28.025 an ounce, erasing an earlier gain of 0.6 percent. The metal is down 3.1 percent this week, the fourth straight decline.
Platinum fell 0.2 percent to $1,450.75 an ounce, heading for a 0.9 percent fall this week, its seventh straight decline. Palladium fell 0.6 percent to $600 an ounce, set for a 0.5 percent weekly loss.
To contact the reporter for this story: Phoebe Sedgman in Melbourne at psedgman2@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
