BLBG:Gold May Decline, Set for Second Monthly Drop, as Euro Advances on Rates
Gold may decline, heading for a second monthly decline, as the euro climbed on speculation that the European Central Bank will raise interest rates next week and as European debt concerns subsided.
Immediate-delivery gold was little changed at $1,511.60 an ounce at 11:12 a.m. in Seoul after losing 0.2 percent earlier. The price is down about 1.6 percent this month after declining 1.8 percent last month. The August-delivery contract was almost unchanged at $1,512 an ounce on the Comex in New York.
“Gold has been quite sensitive to the euro recently,” said Hwang Il Doo, a senior trader at Korea Exchange Bank Futures Co. in Seoul. “Interest-rate rises don’t bode well for gold, basically. Trade is pretty choppy as investor demand remains slack.”
ECB President Jean-Claude Trichet said June 28 that policy makers are in “strong vigilance mode,” supporting expectations for an interest-rate increase at the central bank’s meeting on July 7. The ECB raised its benchmark rate in April for the first time in almost three years. The euro rose 0.2 percent against the dollar, before a report forecast to show European consumer prices accelerated in June.
Gold is up 6.4 percent in 2011 after climbing the past 10 years, the longest run of gains in at least nine decades. Europe’s debt crisis helped bullion reach a record $1,577.57 on May 2. Bullion is set for an 11th quarterly advance. Greece is trying to avoid the euro area’s first default.
Greek Prime Minister George Papandreou yesterday garnered enough votes for his 78 billion euro ($113 billion) package of budget cuts and state asset sales. Luxembourg’s Jean-Claude Juncker, who leads a group of euro-area finance ministers, said the Greek parliament’s vote paves the way for payment of the next aid installment from euro-area governments and the International Monetary Fund.
Silver for immediate delivery was little changed at $34.895 an ounce, falling for a second straight month. Spot platinum was little changed at $1,723.20 an ounce, while cash palladium increased 0.9 percent to $757.50 an ounce.
To contact the reporter on this story: Sungwoo Park in Seoul at spark47@bloomberg.net.
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
