SF: Gold Declines as Rally to Record, Interest Rate Rise Spur Sales
April 7 (Bloomberg) -- Gold declined on speculation that investors are locking in gains after the price rose to a record earlier, and as central bank efforts to combat inflation curbed demand for precious metals.
Immediate-delivery bullion fell as much as 0.4 percent to $1,454.45 an ounce before trading at $1,454.95 at 12:10 p.m. in Singapore. The price gained to a record $1,462.35 earlier. Gold for June delivery in New York was little changed at $1,457.70 an ounce after reaching an all-time high of $1,463.70 yesterday.
"Some traders are taking profits after the recent rally to record prices," said Park Jong Beom, Seoul-based trader with Tongyang Futures Co. "Policies to raise interest rates are also weighing on sentiment a bit."
China raised interest rates this week for the fourth time since mid-October before a report that may show consumer prices climbed last month at the fastest pace since 2008. Federal Reserve Chairman Ben Bernanke this week said inflation must be watched "extremely closely." Minutes from the Fed's March 15 meeting, released yesterday, show dissent on maintaining programs intended to stimulate growth.
The U.S. has kept its benchmark interest rate at a record low since December 2008. Rising interest rates tend to increase the cost of holding non-interest-bearing commodities.
Gold climbed to a record this week as fighting in Libya, Japan's nuclear crisis and concerns about European debt boosted demand for the metal as a protector of wealth. Bullion is up 2.5 percent this year, after jumping 30 percent in 2010 as investors sought sanctuary from currency debasement and accelerating inflation.
'Still Favorable'
"The current climate is still favorable for precious metals," Eugen Weinberg, head of commodity research with Commerzbank AG, wrote in a note to clients. "Continued unrest in North Africa and in the Arab world and the debt crisis in eurozone peripherals are fuelling price speculation."
The U.S. and Italy are each considering arming Libyan opposition forces to speed the ouster of Muammar Qaddafi, according to an official involved in closed-door talks between Secretary of State Hillary Clinton and Italian Foreign Minister Franco Frattini in Washington today. In Japan, workers at the damaged Fukushima Dai-Ichi nuclear plant are pumping nitrogen into a reactor to prevent a possible explosion.
Portugal will seek a bailout from the European Union after the nation's political crisis helped push borrowing costs to record levels and forced it to become the third euro-region country to need rescuing.
Cash silver fell 0.3 percent to $39.435 an ounce after climbing to a 31-year peak of $39.7625 an ounce yesterday. Palladium for immediate delivery lost 0.8 percent to $780.5 an ounce, while platinum shed 0.5 percent to $1,784.25 an ounce.
