BLBG:Gold Snaps Four-Day Advance as Rally Hurts Demand
Gold fell from the highest price in almost three weeks in New York on speculation some investors may sell the metal after prices rallied on stronger physical demand. Silver reached the highest price since June.
Bullion futures climbed 4 percent in the four days through yesterday. The Bloomberg U.S. Dollar Index, a measure against 10 major currencies, rose for a second day before a report that may show U.S. retail sales climbed for a fourth month, strengthening the case for the Federal Reserve to scale back stimulus.
Gold fell into a bear market in April and is down 21 percent this year as some investors lost faith in the metal as a store of value and inflation failed to accelerate amid unprecedented money printing by central banks. Bullion rebounded 12 percent from a 34-month low set June 28 as lower prices spurred demand. Consumption in China, last year’s second-largest consumer, after India, increased 54 percent in the first half of 2013, an industry group said yesterday.
“We may well see a bit of profit taking,” David Govett, head of precious metals at Marex Spectron Group in London, said today in an e-mail. “I would look to buy dips to the low $1,300s if we do. Things feel more constructive at the moment. Good gold consumption figures out of China underpinned the market.”
Gold Price
Gold for December delivery fell 0.6 percent to $1,326.50 an ounce by 7:42 a.m. on the Comex in New York. It reached $1,343.70 yesterday, the highest since July 24. Futures trading volume was 9.5 percent below the average for the past 100 days for this time of day, according to data compiled by Bloomberg. Gold for immediate delivery in London slid 0.8 percent to $1,327.30.
“The market is consolidating after recent gains, with a stronger dollar weighing on prices,” said Sun Yonggang, a macroeconomic strategist at Everbright Futures Co., a unit of one of China’s largest state-owned investment companies. “Higher prices may deter fresh investment and physical purchases.”
Silver for September delivery added 0.4 percent to $21.435 an ounce in New York. Prices reached $21.75, the highest since June 19, after jumping 4.6 percent yesterday. An ounce of gold bought 61.9 ounces of silver in London today, and the ratio should drop toward about 50 in the next couple of years, UBS AG estimates.
“While pressure on gold on the back of Fed-tapering expectations is likely to also weigh heavily on silver, ultimately the white metal should benefit from a pick-up in economic activity,” Joni Teves, an analyst at UBS in London, wrote in a report today. “A recovery in industrial demand would be a catalyst for silver to rebuild the investor base that had been damaged by silver’s violent price moves in recent years.”
Palladium for September delivery was little changed at $737.20 an ounce. Platinum for October delivery was up 0.2 percent at $1,501.60 an ounce, after rising as much as 1.1 percent to $1,514.70, the highest since June 7.
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
