BLBG:Gold Falls in London as Stronger Dollar Curbs Investment Demand
Gold dropped as holdings in exchange-traded products declined and the dollar climbed, curbing demand for the metal as an alternative asset.
Gold holdings in the SPDR Gold Trust, the biggest ETP backed by bullion, fell 0.9 metric ton to 1,205.31 tons as of April 5, the lowest since June 2011. The U.S. Dollar Index (DXY), a gauge against six major counterparts, rallied as much as 0.4 percent today as the yen dropped to the lowest level since 2009.
“ETP outflows remain the largest downside risk to gold prices,” Barclays Plc. analysts including Suki Cooper wrote in a report today. “Should outflows persist at this pace, they would match the weakest month on record, which was set in February.”
Gold for immediate delivery fell 0.2 percent to $1,577.51 an ounce by 9:13 a.m. in London after sliding as much as 0.3 percent. Bullion for June delivery rose 0.1 percent to $1,577.30 an ounce on the Comex.
Earlier, the metal rose to $1,583.20, the highest price since April 2, extending a 1.7 percent rally on April 5 after U.S. jobs data missed economist expectations, bolstering the case for prolonged central-bank stimulus.
Both gold and silver are “hovering dangerously above weak support levels and the strong dollar is squeezing the life out of them,” Citigroup Inc. said in a report today.
Hedge funds cut bets on rising gold prices 22 percent to the lowest level in three weeks in the week ended April 2, U.S. Commodity Futures Trading Commission data show. Silver investors are holding a net-short position of 2,982 contracts, the first bet on a decline since the data begins in 2006, the CFTC data show. Silver for immediate delivery fell 0.2 percent to $27.27 an ounce in London.
International Monetary Fund Managing Director Christine Lagarde said yesterday that a “substantial portion” of the global economy appears better now than a year ago. The IMF predicts global growth of 3.5 percent in 2013, from 3.2 percent a year earlier. Holdings of gold in ETPs have dropped 7.5 percent this year, and prices slumped to a 10-month low on April 4, nearing a bear market.
Platinum gained 0.1 percent to $1,539.10 an ounce and palladium advanced 0.5 percent to $731.70 an ounce.
To contact the reporter on this story: Maria Kolesnikova in London at mkolesnikova@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net
