Gold extended losses for a third day,
nearing a bear market after 12 years of gains, on concern that
investors are seeking higher returns in other assets as the
global economy recovers. Silver, platinum and palladium dropped.
Gold for immediate delivery lost as much as 1 percent to $1,541.82 an ounce, the lowest level since May 30, and was at $1,544.58 at 10:58 a.m. in Singapore. The metal has slumped 18.7 percent from its record close of $1,900.23 in September 2011, nearing the 20 percent that typically defines a bear market.
Further signs of a U.S. recovery may prompt the Federal Reserve to curb stimulus, hurting bullion, Societe Generale SA said on April 2. Credit Suisse Group AG said yesterday that gold may continue to decline, with the resilience of the financial system to recent developments in Italy and Cyprus suggesting reduced risk of a so-called major meltdown. Holdings in exchange-traded products contracted to the lowest since August yesterday, according to data compiled by Bloomberg.
“We’ve seen a lot of people move out of ETFs and into other investments,” Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney, said in an interview on Bloomberg Television. “People are moving out of gold into equities, people are seeing that inflation is not a problem, the U.S. dollar is strong. All these things are messages that that gold looks quite weak.”
The Standard & Poor’s 500 Index rose to a record on April 2, after rallying 10 percent in the first quarter as gold dropped 4.6 percent. Gold extended its decline yesterday even as worse- than-expected economic data from the U.S. hurt commodities from copper to oil, bolstering the case for continued stimulus.
The Institute for Supply Management’s gauge of U.S. service industries fell more than economists forecast in March, while data from ADP Research Institute showed that companies added fewer jobs than projected. The U.S. Labor Department is scheduled to report non-farm payrolls data for March tomorrow.
Federal Reserve Bank of St. Louis President James Bullard said yesterday that the Fed is in no hurry to reduce its record bond buying with inflation running below its 2 percent target. The central bank buys $85 billion of securities a month to support the recovery and cut the jobless rate.
Gold rallied every year from 2001 to 2012 as investors sought protection from currency debasement and potential inflation. Holdings in ETPs have expanded every year since at least 2004, according to data compiled by Bloomberg.
Bullion for June delivery dropped as much as 0.8 percent to $1,541.20 an ounce on the Comex in New York, the lowest for a most-active contract since May 30, and was at $1,543.60.
Spot silver fell as much as 1 percent to $26.73 an ounce, the lowest level since July 24, and was at $26.8075. The metal is headed for a fourth day of losses, the worst streak since May.
Spot platinum slumped as much as 1.5 percent to $1,509.50 an ounce, the lowest since Aug. 31. Palladium lost as much as 1.4 percent to $741 an ounce, the cheapest since March 20.
To contact the reporter on this story: Phoebe Sedgman in Melbourne at psedgman2@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
Gold for immediate delivery lost as much as 1 percent to $1,541.82 an ounce, the lowest level since May 30, and was at $1,544.58 at 10:58 a.m. in Singapore. The metal has slumped 18.7 percent from its record close of $1,900.23 in September 2011, nearing the 20 percent that typically defines a bear market.
Further signs of a U.S. recovery may prompt the Federal Reserve to curb stimulus, hurting bullion, Societe Generale SA said on April 2. Credit Suisse Group AG said yesterday that gold may continue to decline, with the resilience of the financial system to recent developments in Italy and Cyprus suggesting reduced risk of a so-called major meltdown. Holdings in exchange-traded products contracted to the lowest since August yesterday, according to data compiled by Bloomberg.
“We’ve seen a lot of people move out of ETFs and into other investments,” Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney, said in an interview on Bloomberg Television. “People are moving out of gold into equities, people are seeing that inflation is not a problem, the U.S. dollar is strong. All these things are messages that that gold looks quite weak.”
Holdings Shrink
Holdings in ETPs stood at 2,437.38 metric tons yesterday, 7.4 percent below a record reached Dec. 20, according to data compiled by Bloomberg. Holdings in the SPDR Gold Trust, the biggest bullion-backed ETP, fell to the lowest since July 2011, according to data on the fund’s website.The Standard & Poor’s 500 Index rose to a record on April 2, after rallying 10 percent in the first quarter as gold dropped 4.6 percent. Gold extended its decline yesterday even as worse- than-expected economic data from the U.S. hurt commodities from copper to oil, bolstering the case for continued stimulus.
The Institute for Supply Management’s gauge of U.S. service industries fell more than economists forecast in March, while data from ADP Research Institute showed that companies added fewer jobs than projected. The U.S. Labor Department is scheduled to report non-farm payrolls data for March tomorrow.
Federal Reserve Bank of St. Louis President James Bullard said yesterday that the Fed is in no hurry to reduce its record bond buying with inflation running below its 2 percent target. The central bank buys $85 billion of securities a month to support the recovery and cut the jobless rate.
Gold rallied every year from 2001 to 2012 as investors sought protection from currency debasement and potential inflation. Holdings in ETPs have expanded every year since at least 2004, according to data compiled by Bloomberg.
Cycle Turns
Goldman Sachs Group Inc. said in February that bullion’s cycle has probably turned as the U.S. recovers. Rene Hochreiter, chief executive officer of Allan Hochreiter (Pty) Ltd. and the top forecaster in the London Bullion Market Association’s 2012 poll, said in January that gold’s bull market is over.Bullion for June delivery dropped as much as 0.8 percent to $1,541.20 an ounce on the Comex in New York, the lowest for a most-active contract since May 30, and was at $1,543.60.
Spot silver fell as much as 1 percent to $26.73 an ounce, the lowest level since July 24, and was at $26.8075. The metal is headed for a fourth day of losses, the worst streak since May.
Spot platinum slumped as much as 1.5 percent to $1,509.50 an ounce, the lowest since Aug. 31. Palladium lost as much as 1.4 percent to $741 an ounce, the cheapest since March 20.
To contact the reporter on this story: Phoebe Sedgman in Melbourne at psedgman2@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
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