BLBG:Gold Falls After Worst Monthly Run Since 1997 on Recovery Signs
Gold fell for a third day, after the longest run of monthly declines since 1997, as signs the global economy is improving and a strengthening dollar curbed demand for the metal as a protection of wealth. Silver dropped.
Business activity in the U.S. unexpectedly expanded in February at the fastest pace in almost a year and jobless claims dropped more than forecast last week, data showed yesterday. The dollar reached the highest since August against six counterparts. European Central Bank President Mario Draghi said this week that the bank is far from exiting stimulus, while U.S. Federal Reserve Chairman Ben S. Bernanke defended the bank’s $85 billion in monthly asset purchases.
“Strong U.S. economic data yesterday and a dollar that lingers around six-month highs have exerted pressure on the yellow metal,” Joni Teves, an analyst at UBS AG in London, wrote today in a report. “A dovish Fed Chairman Bernanke and U.S. sequestration kicking off suggest that investors ought to keep an eye out for buying opportunities,” she said, referring to U.S. spending cuts that take effect today.
Gold for immediate delivery lost 0.7 percent to $1,568.20 an ounce by 11:18 a.m. in London. Prices dropped 5.1 percent in February for a fifth monthly drop. The metal reached a seven- month low of $1,555.55 Feb. 21. Futures for April delivery fell 0.7 percent to $1,567.10 on the Comex in New York.
Futures Volume
Futures trading volume was 45 percent above the average in the past 100 days for this time of day. Bullion at the morning “fixing,” used by some mining companies to sell output, was at $1,570 in London, down from $1,588.50 yesterday.
Investors sold 109.5 metric tons from exchange-traded products last month, the most ever, data compiled by Bloomberg show. Holdings are at a five-month low of 2,502.7 tons and 4.9 percent below the Dec. 20 record.
No additional U.S. congressional action is planned before the start of the so-called sequester, to be split between defense and non-defense spending. The reductions will total $1.2 trillion over nine years, with $85 billion set to take effect in the remaining seven months of this fiscal year.
Bullion rallied the past 12 years, the best run in more than nine decades, as nations from the U.S. to China pledged more stimulus to bolster economic growth. It’s down 6.4 percent this year. Goldman Sachs Group Inc. said Feb. 25 that gold’s cycle has probably turned as the U.S. economy gathers momentum.
Silver for immediate delivery fell 1.7 percent to $28.0481 an ounce in London, and reached $27.975, the lowest since Aug. 20. A close at $28.007 would be a 20 percent drop from Oct. 4, the common definition of a bear market. Palladium was down 1.7 percent at $716.40 an ounce. Platinum slipped 1 percent to $1,566.80 an ounce, reaching $1,564.40, the lowest since Jan. 8.
To contact the reporter for this story: Nicholas Larkin in London at nlarkin1@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net
