Gold Falls to 4-Month Low as Rise in Stocks Curbs Demand
New York (June 2) Gold traded above the lowest price in almost four months in New York as investors weighed an advance in equities that curbed demand and amid muted physical buying.
Gold capped a 3.6 percent drop last week as the Standard & Poor’s 500 Index of stocks closed at an all-time high May 30. Stronger equities and the dollar curbed demand for gold and the metal will probably fall further, Barclays Plc wrote in a report today. Bullion’s decline took it below a technical level that suggests to some that prices may be poised to rebound.
Bullion slipped about 10 percent since reaching a six-month high in mid-March, when Russia’s standoff over Ukraine spurred haven demand. A majority of the Russian forces have been withdrawn from the Ukrainian border, Rear Admiral John Kirby, a Pentagon spokesman, told reporters on May 30. Hedge funds pared bets on a gold rally at the fastest pace this year.
“I suspect the market will remain in the doldrums, with rallies being sold” before the European Central Bank’s policy meeting and U.S. jobs data due this week, David Govett, the head of precious metals at Marex Spectron Group in London, wrote today in a report. “We have seen very little evidence of physical demand yet.”
Gold for August delivery was little changed at $1,246.70 an ounce by 7:29 a.m. on the Comex in New York. It reached $1,241.10, the lowest since Feb. 3. Futures trading volumes were 29 percent below the average for the past 100 days for this time of day, according to data compiled by Bloomberg. Bullion for immediate delivery lost 0.2 percent to $1,246.70 in London, according to Bloomberg generic pricing.
RSI Level
The metal’s 14-day relative-strength index was at 29.6 today, below the level of 30 that suggests a potential impending rebound to some analysts who study technical charts.
Money managers cut their net-long position, or bets on higher gold prices, by 24 percent in the week to May 27, U.S. Commodity Futures Trading Commission data show. Short holdings betting on a drop surged 72 percent, the biggest gain in six months, the data show.
“The risk status of gold has lessened somewhat,” Jonathan Barratt, the chief investment officer at Ayers Alliance, a wealth management company, said by phone from Sydney. “There’s really no major issues out there that warrant it, you can deploy your funds elsewhere and that’s what people are doing.”
Silver for July delivery rose 0.5 percent to $18.78 an ounce in New York, after reaching $18.615 on May 30, the lowest since June 28, 2013. Platinum for July delivery slipped 0.8 percent to $1,440.70 an ounce. Palladium for September delivery declined 0.4 percent to $832.75 an ounce. It reached $845 on May 28, the highest since August 2011.
Mine workers have been on strike since January in South Africa, the largest producer of platinum and second-biggest for palladium. The three biggest platinum producers and the main union at their South African operations will consider proposals by the mines minister to end the strike.
