After yellow fever, market catches coldPosted on Wednesday, May 16, 2012 - 04:37 am
LONDON: Gold declined in London after a rally to a record on a weakening dollar prompted some investors to sell bullion. Silver was little changed after reaching a 30-year high and palladium traded near a nine-year high. Gold climbed to a record $ 1,394.41 an ounce earlier on Friday. The dollar on Thursday slid to a nine-month low against the euro after the Federal Reserve this week said it will buy an additional $ 600 billion of Treasuries through June to spur growth.
Gold, which usually moves inversely to the greenback, on Thursday rose the most since January 2009.
“It’s not surprising that after a rally to a new record high, some profit-taking will set in,” Peter Fertig, owner of Quantitative Commodity Research in Hainburg, Germany, said on Friday by phone. “I expect the US dollar to remain under pressure, and that will support gold prices,” he said. Immediate-delivery bullion lost $ 3.65, or 0.3%, to $ 1,388.85 an ounce at 9:02 am in London. Prices gained 3.3% on Thursday.
The metal for December delivery was 0.4% higher at $ 1,388.40 on the Comex in New York, after Friday’s record $ 1,394.40. Gold is up 27% this year and is heading for a 10th annual gain, the longest winning streak since at least 1920 in London, partly on demand for an alternative asset to protect against the debasement of currencies. Precious metals have outperformed global equities, Treasuries and most industrial metals this year as central banks maintained low interest rates and governments spent trillions of dollars to spur growth.
The Fed on November 3 said its purchases will be about $ 75 billion a month and pledged to keep the benchmark interest rate close to zero for an “extended period.” The central bank will also reinvest as much as $ 300 billion in proceeds from agency and mortgage debt it holds. “It’s probably because traders are taking profit from what’s been a very strong run” for gold, David Lennox, a resource analyst with Fat Prophets, said from Sydney.
“There’s been really no change in the fundamental factors that should impact on gold.” Ten of 15 traders, investors and analysts surveyed by Bloomberg, or 67%, said the metal will rise next week. Four forecast lower prices and one was neutral. The dollar was little changed on Friday versus the euro. Gold assets in exchange-traded products added 0.25 metric ton to 2,085.85 tons on Friday, the first gain in 15 days, according to data compiled by Bloomberg from 10 providers. Holdings reached a record 2,104.65 tons on October 14.
Silver for immediate delivery in London earlier on Friday reached $ 26.65 an ounce, the highest price since March 1980, and was last down 0.2% at $ 26.255. Prices are up 55% this year. Silver reached an all-time high of $ 50.35 in New York in 1980, a year after the Hunt brothers tried to corner the market. “There’s more room for silver to advance further as it looks relatively undervalued in comparison with gold,” said Chris Yoo, head of global derivatives at Samsung Futures in Seoul. “Also, silver demand for industrial uses normally increases towards year-end.”
An ounce of gold bought as little as 52.2396 ounces of silver in London on Friday, before the collapse of Lehman Brothers Holdings, triggered the worst recession since World War II.
Palladium was 0.2% lower at $ 680.90 an ounce, after reaching $ 688, the highest price since April 2001. It’s up 67% this year. Platinum declined 1% to $ 1,766.43 an ounce. Prices on Thursday reached $ 1,797.50, the highest level since July 2008. Both metals are used mostly to make jewellery and pollution-control devices for cars.