BLBG:Gold Drops Most in Two Weeks as Equity Rebound Trims Demand From Investors
Gold dropped the most in two weeks as a rebound in global equities eroded demand for an alternative asset and spurred investors to sell the metal after its rally to an all-time high.
The MSCI All-Country World Index climbed as much as 2.8 percent while the Standard & Poor’s 500 Index futures jumped 2.7 percent after legal challenges to Germany’s role in the euro rescue funds were rejected by the nation’s top court. Gold futures slipped from a record $1,923.70 an ounce yesterday as the dollar rose to the highest level against six major currencies in more than a month.
“We are witnessing some profit taking as the German court ruling has provided some relief,” Sterling Smith, an analyst at Country Hedging Inc., said in a telephone interview from St. Paul, Minnesota. “The downside volatility in gold can be pretty intense.”
Gold futures for December delivery declined $55.70, or 3 percent, to settle at $1,817.60 an ounce at 1:25 p.m. on the Comex in New York, the biggest drop since Aug. 24.
The price slid about $50 within minutes at about 12:21 a.m., according to Bloomberg data. “We’re seeing continued volatility, but nothing out of the ordinary,” Jeremy Hughes, a Singapore-based spokesman for Comex owner CME Group Inc., said in an e-mailed response to questions about the drop.
“There was probably a large sell order placed after the double top emerged,” said Jonathan Barratt, a managing director at Commodity Broking Services Pty in Sydney. A double top refers to an M-shaped pricing pattern comprising the Aug. 23 high of $1,917.90 and yesterday’s peak, a sign for some investors who study technical charts that gold may fall.
Court Ruling
German Finance Minister Wolfgang Schaeuble said yesterday that Greece won’t get its next bailout installment unless it meets goals under an aid package. A week after Chancellor Angela Merkel’s Cabinet ratified additional measures to combat the euro-area debt crisis, Germany’s top court today rejected three constitutional challenges to the country’s participation in the euro rescue funds.
“This is profit taking today as the German ruling is a wash,” Scott Gardner, the chief investment officer at Panama- based Verdmont Capital SA, said in an e-mail. “Whether Greece gets short-term bailout installments or not does nothing to alleviate the deep structural factors driving the euro-zone debt crisis.”
Silver futures for December delivery fell 23.7 cents, or 0.6 percent, to settle at $41.631 an ounce on the Comex.
On the New York Mercantile Exchange, platinum futures for October delivery declined $29.50, or 1.6 percent, to $1,828.70 an ounce, the biggest fall since Aug. 24. Palladium futures for December delivery gained $3.15, or 0.4 percent, to $752.70 an ounce on the Nymex, rising for the first time in four sessions.
To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Debarati Roy in Mumbai at droy5@bloomberg.net
To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net
