BLBG: Gold Extends Decline as Rally to Six-Month High Seen Overdone
Gold declined for a second day as some investors sold after its rally to a six-month high and demand from India slumped. Silver and platinum also fell.
Bullion fell 2.4 percent yesterday after ending at $927.85 an ounce on Jan. 30, the highest closing price since July 28. It rose in January for the third straight month, as investors sought an alternative investment amid the global recession.
“Gold went up too much in the past several months,” Tatsuo Kageyama, an analyst with Kanetsu Asset Management Co. in Tokyo, said today by phone. “Slumping imports of gold by India also have put pressure on the price.”
Gold for immediate delivery fell as much as 1 percent to $897 an ounce and was at $900 as of 12:30 p.m. Singapore time. The metal lost 2.4 percent yesterday. Silver for immediate delivery declined 0.6 percent to $12.36 an ounce after falling 1.9 percent yesterday.
April-delivery gold was down 0.4 percent at $903 in after- hours trading on the Comex division of the New York Mercantile Exchange, while gold for December delivery on the Tokyo Commodity Exchange lost 1.1 percent to 2,602 yen a gram ($902 an ounce) by the 11 a.m. Tokyo time break.
“Safe-haven investment demand should provide support for gold around current levels as long as equity markets remain pinned down near to their bear market lows,” said Toby Hassall, research analyst at Commodity Warrants Australia Pty in Sydney.
Holdings in the SPDR Gold Trust, the largest exchange-traded fund backed by gold, climbed by 1.2 percent to a record 853.37 metric tons as of yesterday.
U.S. stocks fell yesterday, capping the first three-day drop since November, after the Commerce Department said consumer spending decreased a greater-than-estimated 1 percent in December.
The dollar fell for a second day against the euro. The U.S. currency was at $1.2861 as of 11:12 a.m. in Singapore from $1.2843 late in New York yesterday，when it reached $1.2706, the lowest level since Dec. 5.
Imports by India, the world’s biggest buyer, slumped last month as record prices prompted consumers to sell old jewelry, curbing demand for metal bought overseas. Purchases fell to 1.8 tons to 2 tons from 24 tons a year ago, Suresh Hundia, president of the Bombay Bullion Association Ltd., said Jan. 27.
Among the platinum group metals, platinum declined 0.5 percent to $967 an ounce, and palladium was 0.5 percent higher at $197 an ounce.
