BLBG:Gold Snaps Two-Day Advance as Growth Concern Drives Selloff in Commodities
Gold weakened, snapping a two-day advance, after commodities plunged and the dollar surged by the most in 10 months, eroding the allure of the precious metal as an alternative investment.
Immediate-delivery gold fell 0.3 percent to $1,526.57 an ounce at 9:08 a.m. in Singapore. Gold for August delivery was little changed at $1,526.60 an ounce. Cash silver declined as much as 0.8 percent to $35.5250 an ounce.
The Standard & Poor’s GSCI Index of commodities plunged 3.4 percent yesterday, the biggest drop since May 11, on further signs that the global economy is slowing. The Dollar Index, a six-currency gauge of the dollar’s strength, traded little changed after rallying 1.7 percent yesterday.
“A plunge in commodities and the dollar’s strength seem to be weighing on traders’ minds, with Europe’s debt crisis and the inflation outlook providing little fresh catalysts,” said Seo Mihee, a Seoul-based trader with Hyundai Futures Co. “The market is still in a consolidation mode.”
Asian stocks fell, setting the region’s benchmark index on course for a seventh weekly drop, after the Federal Reserve Bank of New York’s manufacturing index dropped to minus 7.8, the lowest level since November. The gauge was forecast to read 12, according to a Bloomberg survey of economists. Readings of less than zero signal contraction.
Gold has declined 1.7 percent since touching a one-month high of $1,553.65 an ounce on June 6. The metal, which reached a record $1,577.57 an ounce on May 2, is still up 7.4 percent this year, as investors seek protection against sovereign-debt turmoil in Europe and accelerating inflation.
The European Central Bank said yesterday the threat of the Greek debt crisis spilling over into the banking sector is the biggest risk to financial stability. This week, data showed China’s inflation rose at the fastest pace since 2008, while India reported a faster-than-forecast gain in wholesale prices.
“Inflation fears and euro-zone debt concerns will most likely resurface and should once again see investor interest in precious metals return,” Marc Ground, an analyst at Standard Bank Plc, wrote in a note.
Spot palladium and platinum were little changed at $777 an ounce and $1,776 an ounce, respectively.
To contact the reporter on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
