BLBG: Gold Futures Fall to 11--Week Low in New York as Global Equities Advance
Gold fell to the lowest price in 11 weeks as a rally in global equities erodes demand for the precious metal as an alternative investment.
Stocks in Asia, Europe and the U.S. gained with the Dow Jones Industrial Average erasing this year’s loss. Before today, gold was up 8.3 percent this year, reaching a record $1,266.50 an ounce on June 21.
“The risk trade is back on,” said Matt Zeman, a metals trader at LaSalle Futures Group in Chicago. “Investors right now are seeking higher returns, and gold doesn’t fit the bill.”
Gold futures for December delivery fell $20.10, or 1.7 percent, to $1,166.90 an ounce at 9:52 a.m. on the Comex in New York. Earlier, the price dropped to $1,163.60, the lowest level since May 5.
Losses accelerated after the price fell below the 100-day moving average around $1,181, a key area of resistance.
“Gold is finally succumbing to its wounds,” Zeman said. “I have gold positions that I’m looking to exit. There are a lot of sell stops clustered around the $1,180 area.”
Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, dropped to 1,301.74 metric tons yesterday. Assets under management have fallen 1.4 percent this month, heading for the first decline since February.
No Technical Support
“With the disappearance of technical support for the gold market, it appears likely that traders may move to the sidelines and liquidate, rather than hold on to, lingering expectations of the need for safe haven,” said Tom Pawlicki, an analyst at MF Global Holdings Ltd. in Chicago.
The euro was little changed against the dollar, after touching $1.3046, the highest level since May 10. Gold reached all-time highs in euros last month amid Europe’s fiscal woes.
Silver futures for September delivery fell 52 cents, or 2.9 percent, to $17.68 an ounce on the Comex.
Platinum futures for October delivery slipped $10, or 0.6 percent, to $1,545.80 an ounce on the New York Mercantile Exchange.
Palladium futures for September delivery fell $3.50, or 0.7 percent, to $471.50 an ounce.
To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.
