Gold declined for the second time in three days as gains in equities curbed demand for the precious metal as an alternative investment.
The MSCI All-Country World Index of stocks extended an advance to the highest since December 2007. Gold tumbled 28 percent last year after some investors lost their faith in the precious metal as store of value partly amid an equity rally. Prices have rebounded in 2014, gaining 7 percent this month amid signs of faltering U.S. economic growth.
“Money is moving to equities today,” Michael Gayed, the chief investment strategist who helps oversee $250 million at New York-based Pension Partners LLC, said in a telephone interview. “There is also some profit taking, but gold will remain supported because of economic concerns.”
Gold futures for April delivery slid 0.4 percent to $1,326.10 an ounce at 11:40 a.m. on the Comex in New York. Prices have risen 10 percent this year, the third-biggest gain in the Standard & Poor’s GSCI Spot Index of 24 commodities.
The Fed cut monthly U.S. bond buying by $10 billion at each of its past two meetings, leaving purchases at $65 billion. Gold surged 70 percent from December 2008 to June 2011 as the central bank pumped more than $2 trillion into the financial system to boost growth.
Holdings in exchange-traded products backed by the metal climbed 0.4 percent in February, the first increase in 14 months, data compiled by Bloomberg show. Assets declined last year for the first time since the products were introduced in 2003.
Reports tomorrow and March 3 may show more slowing in China, and lawmakers will meet next week to decide on economic policies. The yuan tumbled the most on record on speculation that the central bank will widen the currency’s trading band.
Net-gold imports from Hong Kong by China, the world’s largest buyer, were 83.6 metric tons in January, down from 91.9 tons in December. Chinese buyers may view current prices as too high, Sharps Pixley Ltd., a brokerage handling physical bullion in London, said in a report today.
Silver futures for May delivery fell 0.4 percent to $21.265 an ounce. Prices are poised for an 11 percent advance in February, ending a three-month slump.