BLBG:Gold Declines as European Leaders Gather; Palladium Snaps Eight-Day Rally
Gold declined after holdings in exchange-traded products fell from a record and the European Central Bank was seen cutting interest rates today ahead of a regional leaders’ summit intended to tackle the debt crisis. Palladium futures dropped for the first day in nine.
Immediate-delivery gold fell for the first day in three, losing as much as 0.3 percent to $1,736.43 an ounce and trading at $1,738.02 at 11:30 a.m. in Singapore. February-delivery bullion fell 0.2 percent to $1,741 on the Comex in New York.
Holdings in bullion-backed exchange-traded products dropped to 2,356.716 metric tons yesterday from the all-time high of 2,358.206 tons on Dec. 6, according to Bloomberg data. The ECB will cut rates by a quarter of a percentage point to 1 percent, according to 53 of 58 economists in a Bloomberg News survey.
“We see some liquidation from time to time, when people need to raise cash,” said Wang Yonghong, a Shanghai-based analyst at Guotai Junan Futures Co. “The uptrend remains intact. Gold benefits from both the risk-on and risk-off trades.”
Asian stocks and the euro declined today after separate reports showed unexpected decreases in Japanese machinery orders and Australian employment. The ECB’s announcement from Frankfurt will come hours before a two-day meeting of European leaders in Brussels today. Gold has risen 22 percent this year.
The interest rate for lending gold in exchange for dollars has dropped to the lowest on record as European banks tried to secure U.S. currency, according to data compiled by Bloomberg. The one-month lease rate fell to minus 0.57 percent on Dec. 6, the lowest based on data going back to January 1998.
Palladium Declines
Palladium futures dropped 1.5 percent to $675 an ounce, snapping the longest rally since 2007. March-delivery metal in New York reached $690 yesterday, the highest price since Sept. 22, on speculation increased auto sales will drive demand.
Global car and light-vehicle purchases will climb to a record in 2012, according to LMC Automotive Ltd., a research company in Oxford, England. Four of the six largest automakers by U.S. sales beat expectations in November, boosting industry sales to a 13.6 million seasonally adjusted annualized rate, Autodata Corp. said on Dec. 1.
Palladium futures are still 16 percent lower this year, underperforming gold, silver and platinum, on concern Europe’s debt crisis hurt consumption of the metal used mainly in autocatalysts. Cash palladium fell 0.7 percent to $673.
Spot silver was little changed at $32.5075 an ounce, while platinum fell 0.7 percent to $1,515.75 an ounce.
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
