BLBG: Gold Falls as Climb to 2-Month High Seen Spurring Sales
Gold fell in London on speculation its advance to a two-month high will spur some investors to sell. Platinum declined as South African miners returned to work following a five-month pay strike.
Gold’s 14-day relative-strength index since June 19 had been above or near the level of 70 that suggests to some traders who study technical charts that prices may retreat. It was at 64.9 today. The metal rose 3 percent last week as the Federal Reserve said it will keep interest rates at almost zero for a considerable time, even as it cut bond purchases.
Bullion is set for the first back-to-back quarterly gain since 2011, partly as violence in Iraq and tension in Ukraine spurred demand for a haven. Insurgents are firming their hold on parts of Iraq, according to U.S. officials. A small contingent of U.S. forces has begun operating in Iraq to gather intelligence and establish an operations center in Baghdad, the Defense Department said yesterday.
“The correction from the highs has continued with some good selling seen in Asia,” David Govett, the head of precious metals at Marex Spectron Group in London, wrote today in a report. “We have probably seen the highs for the time being, in the absence of any fresh geopolitical problems.”
Gold for immediate delivery lost 0.3 percent to $1,313.90 an ounce by 9:37 a.m. in London, according to Bloomberg generic pricing. It reached $1,325.95 yesterday, the highest since April 15. Gold for August delivery fell 0.5 percent to $1,314.50 on the Comex in New York.
Trading Volume
Futures trading volume was about the average for the past 100 days for this time of day, according to data compiled by Bloomberg.
Fed Chair Janet Yellen said last week the central bank plans to keep its interest-rate target low for a considerable time after it ends bond buying, which was reduced by another $10 billion to $35 billion per month, from $85 billion in 2013. A report today may show the U.S. economy shrank more than previously estimated.
Nations including Russia, Kazakhstan, Mexico and Portugal added gold to reserves in May, while Ukraine was among countries that reduced holdings, according to data on the International Monetary Fund’s website.
Silver for immediate delivery fell 0.2 percent to $20.8815 an ounce in London. It reached $21.1669 yesterday, the highest since March 18. Platinum declined 0.8 percent to $1,458.25 an ounce. Palladium lost 0.5 percent to $825.05 an ounce.
The world’s three largest platinum producers said workers are returning in large numbers the day after an agreement was signed with the South African labor union that went on strike for five months over pay. The walkout by at least 70,000 miners cost the companies 23.9 billion rand ($2.2 billion) in revenue. The country is the biggest producer of platinum and ranks second for palladium.
“Despite the strike being over, production will not resume for a while and given the extra costs now involved, will in all likelihood be scaled back somewhat,” Marex’s Govett said.
To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Phoebe Sedgman in Melbourne at psedgman2@bloomberg.net
To contact the editors responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net John Deane, Nicholas Larkin
