BLBG:Gold Falls to Lowest Level in Five Months in London as Dollar Extends Gain
Gold fell to a five-month low in London as extended gains in the dollar heightened speculation of slowing demand for precious metals.
The dollar rose 0.3 percent against the euro after climbing 1 percent yesterday. Holdings i (.GLDTONS)n bullion-backed exchange-traded products fell about 1.5 percent from a record on Dec. 14, according to data compiled by Bloomberg. Gold is still up 7.5 percent this year, heading for an 11th consecutive advance.
“Yesterday and overnight the gold price traded lower as a reaction to the stronger U.S. dollar,” said Bayram Dincer, an analyst at LGT Capital Management in Pfaeffikon, Switzerland. “The fundamental investment case for gold is still intact.”
Gold for immediate delivery fell as much as 2 percent to $1,524.80 an ounce, the lowest since July 7 and was at $1,527.49 an ounce by 11:08 a.m. in London.
Futures for February delivery declined 2.1 percent to $1,531.40 an ounce on the Comex in New York and earlier today dropped to $1,525, also the lowest since July 8.
Gold climbed to a record $1,921.15 an ounce on Sept. 6 as investors and central banks and other so-called official institutions boosted holdings to protect their wealth. ETP holdings rose 0.3 percent yesterday, the first increase in two weeks.
“You have stagnating output and on the demand side jewelry consumption adapts to higher prices,” Dincer said. “Official and private sector buying will continue.”
The interest rate (.LIBGO6M) for lending gold in exchange for dollars yesterday was 0.1552 percent, the lowest since Dec. 19 and down from 0.1786 on Dec. 23. One-month lease rates fell to the lowest on record in December as European banks sought ways to secure the U.S. currency amid the region’s debt crisis.
Silver was down 1.2 percent at $26.775 an ounce, platinum dropped 2.9 percent to $1,344.50 an ounce and palladium declined 0.8 percent to $630.75 an ounce. Silver is down 13 percent this year, platinum has dropped 24 percent and palladium fell 21 percent.
To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net
