BLBG: Gold Falls in London as Rising Equities, Dollar Curb Demand
Gold fell for a third day in London as equities rallied and the dollar strengthened, reducing the precious metal’s appeal as an alternative investment.
Stocks rose in Asia and most European markets on speculation that U.S. President Barack Obama’s administration will revive growth with a plan to rid banks of distressed assets. The Dollar Index, which tracks the currency against six other monies, gained as much as 0.4 percent.
“The U.S.’s tackling of toxic assets improves risk appetite,” James Moore, an analyst at TheBullionDesk.com in London, wrote today in a note. “Given the perceived reduction in demand for safe-haven assets and still-strong inflows of scrap metal, gold could look to consolidate” between $890 and $940 an ounce, he said.
Gold for immediate delivery lost as much as $6.97, or 0.7 percent, to $932.53 an ounce and traded at $935.85 by 9:28 a.m. local time. April futures fell 1.7 percent to $935.90 an ounce in electronic trading on the New York Mercantile Exchange’s Comex division.
The MSCI World Index of shares climbed to a one-month high today after U.S. Treasury Secretary Timothy Geithner yesterday unveiled proposals to finance as much as $1 trillion in purchases of illiquid property assets. Still, the benchmark has slid 9.3 percent this year as bullion has gained 6.1 percent.
Inverse Relationship
“Gold often moves inversely to equities and is sold when other investments perform well and market worries ease,” London-based broker ODL Securities Ltd. said today in a report. “If the plan succeeds in relieving banks of toxic assets, gold is likely to fall, but if the plan is considered unsuccessful, gold is likely to rally further.”
Holdings of the metal in exchange-traded funds have climbed to records this year as investors make purchases to protect their wealth. Assets in the SPDR Gold Trust, the biggest ETF backed by bullion, slipped to 1,114.3 metric tons yesterday from a record 1,114.6 tons on March 20, according to figures on the company’s Web site. The drop was the first since March 6.
Among other metals for immediate delivery in London, silver lost 0.8 percent to $13.59 an ounce. Platinum fell 0.6 percent to $1,122.25 an ounce, and palladium gained 0.8 percent to $211 an ounce.
