BLBG:Gold Slides to 3-Month Low as Silver Declines on U.S. Optimism
Gold dropped to a three-month low in New York on optimism Senate leaders will forge a deal to reopen the U.S. government and avoid a breach of the debt limit. Silver slipped to the lowest in two months.
Senate Majority Leader Harry Reid said yesterday he hoped a deal could be announced today. The emerging deal would stave off a potential default, end the 15-day-old government shutdown and change the immediate deadlines in favor of three new ones over the next four months. Without an agreement, U.S. borrowing authority lapses on Oct. 17.
Gold is set for the first annual drop in 13 years as some investors lost faith in the metal as a store of value and on speculation the Federal Reserve will slow debt purchases. Holdings in gold-backed exchange-traded products are at a three-year low and 24 of 41 economists surveyed Sept. 18-19 said the U.S. central bank will start slowing bond-buying in December.
“Markets generally still believe that an extension to the debt ceiling, or at least a resolution that buys more time, is highly likely,” Tom Kendall, an analyst at Credit Suisse Group AG in London, wrote today in a report. “It may be that markets have underestimated the risks of a U.S. default, but unless there is a realistic prospect that bills will not be honored, it seems that gold is likely to remain within its downward trend.”
Gold Price
Gold for delivery in December fell 1.2 percent to $1,261.60 by 7:40 a.m. on the Comex in New York. Prices reached $1,251, the lowest since July 10. Futures trading volume was 27 percent above the average for the past 100 days for this time of day, data compiled by Bloomberg showed. Gold for immediate delivery in London declined 0.7 percent to $1,262.97.
The emerging agreement would suspend the nation’s debt limit through Feb. 7, 2014, fund the government through Jan. 15 and require a House-Senate budget conference by Dec. 13, according to a Senate source familiar with the talks.
“We are close to some sort of resolution,” David Govett, head of precious metals at Marex Spectron Group in London, wrote today in a report. “Albeit one that I suspect will just kick the can down the road. Until this is finalized, we can expect gold to jump around.”
Gold holdings in ETPs dropped 1.6 metric tons to 1,908.2 tons yesterday, the lowest since May 2010, data compiled by Bloomberg show.
Silver for December delivery dropped 2.9 percent to $20.73 an ounce in New York, reaching $20.495, the lowest since Aug. 9. Palladium for December delivery fell 1.2 percent to $706.45 an ounce. Platinum for January delivery lost 1.3 percent to $1,365.90 an ounce. It reached $1,361.30, the lowest since July 10.
To contact the reporter 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
