MW: Gold snaps winning streak to post modest losses
Other metals follow gold's lead, fall
By Claudia Assis, MarketWatch
SAN FRANCISCO (MarketWatch) -- Gold futures fell Wednesday, slipping modestly following six consecutive days of gains and a day after closing near their record high.
Gold for August delivery, the most active contract, retreated $5.20, or 0.4%, to $1,219.60 an ounce on the Comex division of the New York Mercantile Exchange.
"Some of the flight-to-quality buying is coming out of the market as we've seen some optimism in the stock market," said Adam Klopfenstein, a senior market strategist at Lind-Waldock in Chicago.
Gold was also battling a stronger dollar and "going back to that classic negative correlation" with the U.S. currency for the day, he added.
A rising dollar is usually negative for commodities as it makes them more expensive to holders of other currencies. Gold, however, has many times defied that norm as the dollar was seen as a lesser problem than other currencies such as the embattled euro.
The dollar index (DXY 87.00, +0.36, +0.41%) , which compares the U.S. unit to a basket of six currencies, was up 0.4% to 87.03.
Gold finished at $1,226.90 an ounce on Tuesday, the highest close for a most-active contract since May 17 and tantalizingly close to the May 12 record of $1,243.10 an ounce.
Gold posted steeper losses after the National Association of Realtors reported Wednesday its pending home sales index rose 6% in April after an upwardly revised 7.1% increase in March.
Holdings of SPDR Gold Trust (GLD 119.34, -0.58, -0.48%) , the largest exchange-traded fund backed by gold, on Tuesday rose to 1,268 metric tons ( 1,397 short tons), a fresh record.
If gold's trend is upward, analysts are growing increasingly concerned about base metals and precious metals such as platinum that take most of their shine from industrial uses.
One of the key worries is slower Chinese economic growth.
Copper for July delivery declined 8 cents, or 2.4%, to $2.99 a pound. Platinum for July delivery retreated $9.40, or 0.6%, to $1,539.50 an ounce. Palladium for September delivery was off $11.10, or 2.4%, to $451 an ounce.
"At this stage, there are too many headwinds preventing a number of commodity complexes -- including metals -- from mounting a credible recovery. Chief among them: the fact that the euro has yet to bottom out, while the U.S. equity market has been derailed as a positive force in establishing upward momentum," analysts at MF Global said in a report Wednesday.
"There are also ongoing concerns about the global recovery slowing in the wake of the uncertainties in Europe and steadily tightening credit conditions in China," they added.
