Gold falls 1.2 per cent on Comex
New York (Nov 19) GOLD futures retreated as fresh record highs in US equities markets and worries about a rollback of Federal Reserve stimulus prompts less demand for the perceived haven asset.
The most actively traded contract, for December delivery, on Monday fell $US15.10, or 1.2 per cent, to $US1,272.30 a troy ounce on the Comex division of the New York Mercantile Exchange.
Gold, which held losses through Asian and European trading hours, slumped to fresh lows after US stock exchanges opened and major indexes hit record highs. The Dow Jones Industrial average topped 16,000 for the first time, while the S&P 500 index breached a record 1,800.
Some investors buy gold as a refuge from turmoil in other markets. But with US stocks climbing to a series of records, and some market watchers saying the world has exited economic-crisis mode, investors have cashed out of gold.
"With equities doing what they've been doing? That's taking the safe-haven demand out of this market completely," said Bob Haberkorn, a senior commodities broker with RJO Futures.
"A lot of traders have their eyes off of gold."
The gold market for much of this year has been focused on the timing of the expected wind down of Federal Reserve stimulus. Programs like the Fed's current $US85 billion-a-month bond-buying can draw investors to gold as a hedge against inflation. However, a steadying US economy has boosted expectations that the Fed would soon begin to roll back that effort, helping send gold down 23 per cent year-to-date.
Minutes from the central bank's latest meeting are set for release on Wednesday (US time).
In testimony to Congress last week, Fed chairwoman nominee Janet Yellen outlined support for the central bank's effort, saying the US economy wasn't yet firing on all cylinders. Gold last week eked out a 0.2 per cent gain, snapping a two-week losing streak.
"Despite a dovish tone from Janet Yellen last week, it seems the futures market is looking beyond that, towards the eventual start of trimming by the Fed," Standard Bank analyst Walter de Wet said in a note.
Many market watchers expect an eventual reduction in Fed easing to lead to higher interest rates. Rising rates make gold, which offers no interest, less attractive compared to yield-bearing assets.
Settlements (ranges include open-outcry and electronic trading):
London PM Gold Fix: $1,283.50; previous PM $1,287.25
Dec gold $1,272.30, down $15.10; Range $1,269.20-$1,289.20
Dec silver $20.357, down 370 cents; Range $20.290-$20.800
Jan platinum $1,410.10; down $27.90; Range $1,410.60-$1,442.00
Dec palladium $716.75, down $15.90; Range $716.00-$733.40
