BLBG: Gold Drops in London as Rising Stocks Curb Safe-Haven Demand
Gold declined for the first day in three in London as gains by equities curbed demand for the precious metal as a haven. Silver also dropped.
European and Asian stocks climbed and U.S. index futures advanced on speculation the worst of the global recession may be over. U.S. industry reports showed the country’s auto sales and a manufacturing gauge beat analysts’ estimates. House prices unexpectedly rose in the U.K., where world leaders meet today to discuss their response to the economic crisis.
“Equity markets are finding very good support,” Walter de Wet, a London-based analyst at Standard Bank Ltd., wrote today in a report. “This optimism might see gold struggle.”
Bullion for immediate delivery fell as much as $12.93, or 1.4 percent, to $914.47 an ounce and traded at $918.84 by 11:28 a.m. local time. June futures lost 0.7 percent to $920.80 an ounce in electronic trading on the New York Mercantile Exchange’s Comex division.
The metal slipped to $914.75 in the morning “fixing” in London, used by some mining companies to sell production, from $924.50 at yesterday’s afternoon fixing. Spot prices, headed for a second weekly drop, reached a record $1,032.70 in March 2008.
The MSCI World Index of shares gained as much as 2.2 percent, advancing for a third day. Still, the benchmark has dropped 9.3 percent this year as gold has added 4.2 percent.
G-20 Summit
Leaders from the Group of 20 nations meet in London today to consider an agenda aimed at ending the worldwide slump and avoiding a repeat of the financial crisis. U.S. President Barack Obama and his G-20 counterparts, responsible for 85 percent of the world economy, are scheduled to release a statement at about 3 p.m. London time.
As traditional measures reach their limits, policy makers have indicated they may offer banks longer-term loans to ease credit strains. The Federal Reserve is buying Treasury bonds in an effort to lower consumer interest rates and stoke growth, a policy known as quantitative easing that has fueled concern among some investors about possible future inflation.
The European Central Bank probably will cut interest rates by 0.5 percentage point to a record low of 1 percent today, according to a Bloomberg survey of economists. The central bank will announce its decision at 12:45 p.m. London time.
Should ECB President Jean-Claude Trichet “confirm that indeed the ECB will not be easing quantitatively, the euro might gain ground against the dollar,” de Wet wrote. Gold tends to rise when the dollar weakens.
ETF Holdings
Bullion has advanced this year on concern government and central bank stimulus packages will devalue the dollar and stoke inflation. Assets in the SPDR Gold Trust, the biggest exchange- traded fund backed by the metal, remained unchanged at a record 1,127.44 metric tons for a second day on March 31, according to the latest figures on the company’s Web site.
“With equity markets consolidating and ETF demand slower than previous weeks, gold is lacking significant momentum” and may trade between $900 an ounce and $950 for now, said James Moore, an analyst at TheBullionDesk.com in London.
Among other metals for immediate delivery in London, silver dropped 0.5 percent to $13 an ounce. Platinum was little changed at $1,140 an ounce, and palladium rose 0.6 percent to $220 an ounce.
