BLBG:Gold Heads for Worst Slump Since March 2009 as Holdings Contract
Gold fell for a seventh day in the worst slump since March 2009 as exchange-traded product holdings shrank, the dollar strengthened and a U.S. Federal Reserve policy maker said stimulus may be reduced within months.
Gold slid 18 percent this year, falling into a bear market last month, as some investors lost faith in the metal as a store of value and equities rallied on mounting confidence the U.S. economy is improving. The dollar traded near the highest level since July versus six major currencies as Fed Bank of San Francisco President John Williams said yesterday the central bank may begin to taper off monthly bond purchases as early as this summer. Gold ETP assets fell every week since February.
“The reasons for holding safe-haven assets have abated,” James Moore, an analyst at FastMarkets Ltd. in London, said today by phone. “Investors are looking again at stronger growth assets.”
Gold for June delivery fell 0.7 percent to $1,376.80 an ounce by 7:47 a.m. on the Comex in New York. Prices reached $1,368 yesterday, the lowest since April 18, and are down 4.2 percent this week. Futures trading volume was 39 percent above the average in the past 100 days for this time of day, according to data compiled by Bloomberg. Gold for immediate delivery in London slipped 0.7 percent to $1,376.95.
Holdings in exchange-traded products dropped 7.1 metric tons to 2,207.1 tons yesterday, the lowest since July 2011, according to data compiled by Bloomberg. Assets slipped 16 percent this year. Filings showed Soros Fund Management LLC and BlackRock Inc. (BLK) were among funds that cut stakes in the SPDR Gold Trust, the biggest gold ETP, in the first quarter.
ETP Holdings
“Gold keeps flowing out of the ETFs and that’s going to depress prices,” said Wang Xiaoli, chief investment strategist at CITICS Futures Co., a unit of China’s biggest listed brokerage. “You’ll get some buyers on the way down but that’s not going to be enough to stop the downward momentum.”
The Fed buys $85 billion of Treasury and mortgage debt a month. “It’s clear that the labor market has improved since September,” when the Fed began its latest round of asset purchases, the San Francisco Fed’s Williams said yesterday in a speech in Portland, Oregon. The central bank may reduce the pace of buying by this summer and end the program late this year, he said.
Seventeen analysts surveyed by Bloomberg expect prices to fall next week, with eight bullish and three neutral, the highest proportion of bears in two weeks. Gold will trade at $1,100 in a year, according to Credit Suisse Group AG.
Silver for July delivery fell 0.9 percent to $22.46 an ounce in New York, set for a 5.1 percent weekly slide. Palladium for June delivery lost 0.8 percent to $735 an ounce, cutting its weekly increase to 4.2 percent. That would be a fourth week of gains that’s the best run since February. Platinum for July delivery was 0.7 percent lower at $1,475.40 an ounce. It’s down 0.7 percent this week.
To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net
