BLBG: Gold Declines in Asia as Equity Rally Curbs Safe Haven Appeal
Gold declined in Asia as rising equities reduced the metal’s appeal as a safe haven asset after a weaker dollar fueled gains last week.
Asian stocks, led by banks and mining companies, advanced 1.5 percent on optimism Japan will step up measures to bolster its economy, and as oil and copper prices rose.
“Gold will keep to its range trade as it gets pulled in opposite directions by the stock and currency markets,” Pan Jinghua, an analyst at Shanghai Jinpeng International Futures Co., said today.
Gold for immediate delivery fell 0.3 percent to $949.65 an ounce at 10:02 a.m. in Singapore, after rising as much as 0.7 percent earlier.
Gold rose 2.4 percent last week as the Dollar Index, which tracks the greenback against six major trading partners, slumped 4 percent, and as the benchmark MSCI Asia Pacific Index surged 6 percent. Bullion tends to climb when the dollar falls as investors seek to preserve their wealth and it becomes cheaper for holders of other currencies.
The dollar weakened against the euro before the Obama administration this week outlines regulatory changes aimed at avoiding a repeat of the crisis that’s crippled the U.S. banking system, hurting the appeal of the dollar as a refuge. The dollar last traded at $1.3655 per euro compared with $1.3582 on Friday.
Gold has “got the potential to test $980, $990 this week,” Peter McGuire, managing director at Commodity Warrants Australia Ltd., said in a Bloomberg Television interview today. “The major driver is where the U.S. dollar trades this week and we see further downside on that one.”
SPDR Holdings
Assets in the SPDR Gold Trust, the biggest such fund backed by bullion, expanded to a record 1,114.6 metric tons for a third day March 20, according to figures on the company’s Web site.
Twenty-one of 28 traders, investors and analysts surveyed from Tokyo to Chicago advised buying gold this week as the dollar tumbles. Five said to sell, and two were neutral.
Among other precious metals for immediate delivery, silver was little changed at $13.7525 an ounce, platinum lost 1.2 percent to $1,101.50 an ounce, and palladium slid 0.6 percent to $205.75 an ounce as of 9:14 a.m. in Singapore.
