BLBG:Gold Drops As U.S. Data, China Speculation Temper Europe
Gold is set to decline for a second day in London on concern Europe’s debt crisis will strengthen the dollar and curb demand for the metal as an alternative investment. Palladium dropped.
Italy’s borrowing costs rose at an auction of two-year notes yesterday before a two-day European Union summit in Brussels starting tomorrow. The euro was little changed versus the dollar. The China Securities Journal said the country may introduce “more proactive” policies to ensure stable growth in the world’s second-largest economy.
“It’s clear that the metal is now more concentrated towards the European issues,” analysts at Hyderabad, India- based Karvy Comtrade said in a report today. “The euro therefore seems to remain under substantial threat. Gold is therefore likely to remain under pressure.”
Bullion for immediate delivery fell 0.4 percent to $1,565.98 an ounce by 9:25 a.m. in London. Gold has dropped 6.1 percent since the end of March, the worst quarterly performance since the three months to June 2004. August-delivery futures were 0.6 percent lower at $1,566.30 on the Comex in New York.
The metal is up 0.1 percent this year after 11 consecutive annual increases. Holdings in gold-backed exchange-traded products were little changed at 2,409 metric tons yesterday, within 0.1 percent of the all-time high set in March, data compiled by Bloomberg show.
The EU summit starting tomorrow is the first meeting of European leaders since pro-bailout parties in Greece won at parliamentary elections on June 17. France and Italy are urging Germany to help end the debt crisis, now in its third year.
“We’re unlikely to get a big direction either way until a clearer picture about Europe emerges from the summit,” said Feng Liang, an analyst at GF Futures Co., a unit of China’s second-largest listed brokerage.
Silver for immediate delivery fell 0.9 percent to $26.8638 an ounce and is down 17 percent this quarter. Palladium slipped as much as 2.8 percent to $580.25 an ounce, the lowest price since Nov. 30, and is set for an 11 percent quarterly loss. Platinum was down 1.4 percent at $1,407.63 an ounce. It slipped 14 percent this quarter.
To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net
