BLBG: Gold Extends Decline as Rally to Six-Month High Seen Overdone
Gold declined for a third day as some investors sold the metal on speculation that a rally to a six- month high was overdone. Silver also fell.
Bullion fell 3 percent in the past two days after ending at $927.85 an ounce on Jan. 30, the highest closing price since July 28. The metal advanced in January for the third straight month, as investors sought an alternative investment amid the global recession.
“Speculative long positioning looks overstretched in the sector,” Shivani Tharmaratnam and Tobias Merath, analysts at Credit Suisse, said in a report today. Long-positions are bets that prices will advance.
Gold for immediate delivery declined as much as 0.4 percent to $896.79 an ounce and was at $898.08 at 11:30 a.m. Singapore time. Silver for immediate delivery dropped 0.6 percent to $12.37 an ounce.
April-delivery gold eased 0.2 percent to $899.30 in after- hours trading on the Comex division of the New York Mercantile Exchange, after dropping 3.9 percent in the past two days. Speculative net-long positions last week reached the highest since August.
Gold for December delivery on the Tokyo Commodity Exchange lost 0.2 percent to 2,591 yen a gram ($900 an ounce) at the 11 a.m. Tokyo time break.
Speculative net long positions currently account for about 25 percent in the silver market and about 40 percent in the platinum and palladium markets, the Credit Suisse analysts said.
Auto Industry
Sentiment in platinum and palladium is “additionally suffering from weak U.S. vehicle sales” as the precious metals can be used in auto catalysts, the report said.
General Motors Corp. and Ford Motor Co. said yesterday U.S. sales plummeted at least 40 percent in January, while Toyota Motor Corp. sales dived by almost a third, dragging the world’s biggest auto market to the worst month since 1981.
U.S. industrywide deliveries tumbled 37 percent to 656,976 as the recession ravaged demand. That translates into an annual rate of 9.6 million after an average of more than 16 million vehicles in this decade.
Platinum rose 0.3 percent to $965.50 at 11:30 a.m. in Singapore, after falling 1 percent yesterday. Palladium fell 1.4 percent to $193 an ounce.
