Gold Falls From 3-Week High on U.S. Outlook as Palladium Drops
London (Apr 15) Gold fell from a three-week high on speculation that signs of an improving U.S. economy will curb demand for a haven. Palladium declined from the highest price since August 2011.
The Bloomberg Dollar Spot Index advanced for a third day before data that may show a manufacturing gauge rose for a second month and after a report yesterday showed retail sales increased more in March than economists forecast. Palladium slipped as much as 2.1 percent today, after climbing the previous five sessions.
Gold gained yesterday as tension in Ukraine sparked concern that more sanctions will curb raw-material supplies from Russia, the largest palladium producer. Last year, gold slid 14 percent in the two sessions through April 15, the biggest two-day slump in three decades and marking bullion’s entry into a bear market. Bullion has rebounded 9.1 percent this year.
The metal has been “pressured by very strong retail sales data from the U.S.,” Abhishek Chinchalkar, an analyst at Mumbai-based AnandRathi Commodities Ltd., wrote in a report. “We expect the upside to be checked by weak physical demand from China and evidence that the U.S. economic recovery is gaining momentum. At the same time, we believe the downside to be protected by lingering worries that the Ukrainian situation could spiral out of hand.”
Bullion for immediate delivery fell 1.3 percent to $1,310.65 an ounce by 9:30 a.m. in London, according to Bloomberg generic pricing. It reached $1,331.20 yesterday, the highest since March 24. Gold for June delivery lost 1.2 percent to $1,311.92 on the Comex in New York. Futures trading volume was 43 percent above the average for the past 100 days for this time of day, data compiled by Bloomberg showed.
Ukraine Crisis
U.S. President Barack Obama and Russian President Vladimir Putin remained at odds over Ukraine as fighting there between pro-Russian separatists and government forces highlighted instability in the country’s east. The Obama administration hasn’t ruled out unilateral sanctions that would more directly target sectors of the Russian economy, including energy, financial services, metals and mining, engineering and defense.
“Gold benefited from the escalation in tension between Russia and the Ukraine, but upbeat U.S. economic data put a damper on the safe-haven rally,” Sun Yonggang, a macroeconomic strategist at Everbright Futures Co., said from Shanghai today.
Bullion will decline to $1,025 an ounce at the end of December as the Federal Reserve withdraws stimulus amid an improving economy and inflation remains subdued, Justin Smirk, senior economist at Westpac Banking Corp., said at a briefing in Singapore today. He’s the second-most accurate gold forecaster over the past two years, data compiled by Bloomberg show.
