BLBG: Gold May Decline on Dollar’s Gain and Expectations of Recovery
Gold, little changed in London, may drop after the dollar rose and comments by U.S. President Barack Obama and Federal Reserve Chairman Ben Bernanke fueled expectations that the worst of the economic slump may be over.
The Dollar Index, which measures the currency against the euro and five other monies, added as much as 0.5 percent. Gold and the greenback typically move inversely. An economic-stimulus package is starting to “generate signs of economic progress,” Obama said, and Bernanke pointed to indications that the economy’s “sharp decline” is slowing.
“You have expectations after the speech by Obama that there will be a recovery of the economy,” Peter Fertig, owner of Hainburg, Germany-based Quantitative Commodity Research Ltd., said by telephone. “That implies you don’t need to hold gold any longer as an insurance against a financial collapse.”
Bullion for immediate delivery rose 98 cents, or 0.1 percent, to $891.70 an ounce at 11 a.m. local time. June gold futures added 0.1 percent to $892.50 an ounce on the New York Mercantile Exchange’s Comex division. The metal climbed this week as high as $899.95 an ounce, the highest since April 3.
Gold rose to $892.25 in the morning “fixing,” used by some mining companies to sell production, from $887.50 at yesterday’s afternoon fixing.
The metal dropped in four of the past five weeks as the Standard & Poor’s 500 Index of shares jumped 25 percent, fueled by expectations of an economic rebound. Stocks rose even as some companies reported lower earnings. So far, about 27 percent of S&P 500 companies have reported negative earnings surprises for the first quarter.
Gannett, JPMorgan
“This week we expect gold to receive support from negative corporate earnings and disappointing macro releases, although a firmer dollar could temper gains,” Andrey Kryuchenkov, an analyst at VTB Capital in London, wrote in a report.
Motorcycle manufacturer Harley-Davidson Inc., newspaper publisher Gannett Co. and lender JPMorgan Chase & Co. are among companies scheduled to report results this week. U.S. economic reports from consumer prices to housing starts are due.
Increasing expectations of an economic recovery may prompt investors to turn to riskier assets, reducing the allure of gold because it’s often bought as a haven, Fertig said.
Hedge-fund managers and other large speculators reduced their net-long position in New York gold futures, or bets on higher prices, by 17 percent in the week ended April 7, according to U.S. Commodity Futures Trading Commission data.
“Large speculators have reduced massively net long positions, which is also an indication that gold will have trouble surpassing $900,” Fertig said.
SPDR Holdings
Investment in the SPDR Gold Trust, the biggest exchange- traded fund back by bullion, has been unchanged since rising to a record 1,127.68 metric tons on April 9.
Bullion will average $865 an ounce this year, falling to $675 in 2010, Societe Generale SA predicted on March 27.
Silver for immediate delivery slipped 0.1 percent to $12.76 an ounce. Fresnillo Plc, the world’s largest producer of the metal, said first-quarter output rose 9.1 percent and this year’s total will increase compared with 2008. Silver output was 34.8 million ounces last year.
Platinum rose $14.25, or 1.2 percent, to $1,223.75 an ounce. The metal climbed to a six-month high of $1,252 an ounce on April 13 and has risen 32 percent this year. Last week it gained 4.6 percent, the most in four weeks, helped by news that Chinese passenger-car sales rose to a record in March.
