BLBG:Gold May Extend Drop in Worst Run This Year as Europe Debt Woes Resurface
Gold may decline for a fourth day in the worst run this year as concern resurfaced that Europe’s debt crisis will slow economic growth, eroding the investment appeal of commodities and equities. Silver fell.
Spot gold traded little changed at $1,673.26 an ounce at 2:46 p.m. Singapore time, paring gains of as much as 0.3 percent earlier. The metal fell to $1,663.30 yesterday, the lowest since Jan. 25. Bullion assets in exchange-traded products gained to 2,406.313 metric tons yesterday, according to data compiled by Bloomberg. Gold lost 2.6 percent in the past three days as the dollar rose 1.3 percent against a six-currency basket.
“Investors are rushing to exit as economic indicators have recently surprised to the downside,” said Tobias Merath, head of global commodity research at Credit Suisse AG’s private- banking unit. “Concerns whether Greece can persuade enough private investors to swap their bonds are creating additional uncertainty.”
Australia’s economy expanded at half the pace economists forecast in the fourth quarter, data showed today, adding to signs Europe’s debt crisis may be hurting global growth. That and a looming deadline for Greece to reach a deal with creditors over a bond swap to secure a second aid package sent Asian equities lower for a third day.
Spot gold of 99.99 percent purity on the Shanghai Gold Exchange dropped for a third day, declining as much as 1.7 percent to 340 yuan a gram ($1,677.47 an ounce), the lowest price since Feb. 2. Volumes for the benchmark cash contract were 5,296.80 kilograms (170,296 ounces) yesterday, up from 5,071.60 kilograms on March 5.
Technical Levels
Gold dropped below the 200-day moving average for the first time in almost two months, a bearish signal to some investors who study price charts. Still, it has so-called technical support at $1,656 an ounce, according to Scotiabank. That’s the 50 percent Fibonacci retracement of the rally from $1,522.65 on Dec. 29 to a 15-week high of $1,790.75 on Feb. 29.
“Risk remains for a deeper correction,” with a 61.8 percent retracement to $1,625, Scotia’s strategist Russell Browne, wrote in a note. Buy orders tend to be clustered close to chart support levels.
Silver, this year’s best-performing metal, lost 0.4 percent to $32.8375 an ounce, after sliding to $32.48 an ounce yesterday, the lowest price since Jan. 25.
Spot platinum gained 0.5 percent to $1,623.75 an ounce, snapping three days of declines. Palladium climbed 0.9 percent to $673.38 an ounce, gaining for the first time in four days.
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
