BLBG:Gold May Fall as Industrial Metals Drop on Concern About Economic Growth
Gold may decline for the first time in three days in London as metals fall amid concern slower growth will curb demand for materials.
Five of the six main industrial metals on the London Metal Exchange declined today after the World Bank cut its global growth forecast by the most in three years. The dollar weakened versus the euro after a hedge-fund manager on a creditors’ committee for Greece said yesterday the country is nearing a deal on its debt. Gold climbed to a one-month high yesterday.
“At the moment, gold is trading as a commodity,” Peter Fertig, owner of Quantitative Commodity Research Ltd. in Hainburg, Germany, said by phone today. “If commodities trade lower, that may have a negative impact on gold.”
Bullion for immediate delivery fell 48 cents to $1,651.57 an ounce by 9:35 a.m. in London. Prices climbed to $1,667.90 yesterday, the highest since Dec. 13. Gold for February delivery was down 0.3 percent at $1,651.40 on the Comex in New York.
The metal climbed 10 percent in 2011, an 11th consecutive annual gain, as investors sought to diversify from equities and some currencies. While gold slid 14 percent since touching a record $1,921.15 in September, holdings in bullion-backed exchange-traded products are within 2 percent of last month’s all-time high. Assets were 2,360.8 metric tons yesterday, the most in four weeks, data compiled by Bloomberg show.
The world economy will grow 2.5 percent this year, down from a June estimate of 3.6 percent, as the euro area contracts 0.3 percent, the Washington-based World Bank said. The dollar was down against the euro even amid reports that Fitch Ratings may cut Italy’s credit rating by two levels by the end of January.
Global Liquidity
“Core investment drivers have not changed significantly but have merely been delayed by the sovereign debt crisis surrounding the euro,” Walter de Wet, the head of commodities research at Standard Bank Plc in London, wrote in a report e- mailed yesterday. “Global liquidity will continue to grow in the current economic environment, which would be supportive for gold.”
India raised import duties on gold bars and coins to 2 percent and the silver levy to 6 percent, potentially cooling demand from jewelry buyers and investors, the finance ministry said yesterday. Gold imports were already poised to drop 48 percent in the first quarter as a weaker rupee boosted prices and high borrowing costs curbed demand, Prithviraj Kothari, president of the Bombay Bullion Association, said Jan. 3.
Silver for immediate delivery fell 0.3 percent to $29.995 an ounce. Palladium was down 0.6 percent at $648.50 an ounce. Platinum slipped 0.8 percent to $1,510.25 an ounce.
To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net
