BLBG:Gold Slumps on Stimulus Concern as Commodities Selloff Deepens
Gold fell for a second day, heading for the first back-to-back drop in two weeks, as investors assessed the prospect of reduced U.S. stimulus and a rally to a two-month high damped demand. Silver slumped by the most in six weeks, while platinum and palladium declined with commodities.
Spot gold lost as much as 1 percent to $1,352.08 an ounce, and traded at $1,355.70 at 2:41 p.m. in Singapore, erasing gains of 0.3 percent. Prices rose to $1,384.55 yesterday, the highest level since June 18, before closing down 0.8 percent as concern that the Federal Reserve will slow the pace of its $85 billion in monthly bond buying hurt commodities, stocks and bonds.
Bullion is 19 percent lower this year on speculation that the Fed may cut asset purchases that helped the metal cap a 12-year bull run last year. Minutes of the Federal Open Market Committee’s July 30-31 meeting due tomorrow may indicate when policy makers plan to pare the debt-buying program. Commodities from oil to copper and corn fell with stocks and bonds today.
“Prices dropped quickly as some investors started to close out positions to reduce risks before the Fed releases its minutes,” said Guan Bingren, a trader at Shanghai Hedge International Trading Co. “This is also related to the broad selloff today.”
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Gold for December delivery fell as much as 1 percent to $1,351.60 an ounce on the Comex in New York, before trading at $1,354.10. Futures climbed 0.3 percent earlier. Bullion futures on the Multi Commodity Exchange of India Ltd. and on the Shanghai Futures Exchange each retreated more than 1.4 percent. India and China are the world’s largest consumers.
In China, the volume for Shanghai’s benchmark spot contract fell to 8,398 kilograms yesterday, the lowest since Aug. 8, according to data from the Shanghai Gold Exchange. Gold of 99.99 percent purity snapped a three-day gain to trade 1.3 percent lower at 270 yuan a gram ($1,371.63 an ounce).
Assets in the SPDR Gold Trust, the biggest exchange-traded product backed by bullion, fell to 912.32 metric tons yesterday, after last week capping the first weekly gain this year.
Silver for immediate delivery sank as much as 3.7 percent to $22.309 an ounce, the biggest intraday drop since July 5, before trading at $22.614. Prices rallied to $23.6225 yesterday, the highest level since May 14, before closing down 0.4 percent. The metal’s 14-day relative-strength index was above the level of 70 for a third day yesterday, indicating to some investors who study technical charts that a decline may be imminent.
“Silver was still looking overbought even after yesterday’s drop,” said Mark To, head of research at Wing Fung Financial Group, a Hong Kong-based precious metals trader and refiner. “We expect silver to consolidate in the near term.”
Spot platinum declined 0.6 percent to $1,500.10 an ounce, extending losses into a third day, while palladium decreased 0.7 percent to $746.40 an ounce.
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
To contact the editor responsible for this story: Jake Lloyd-Smith at jlloydsmith@bloomberg.net
