Gold Extends Drop From 17-Week High as Data Backs Taper Outlook

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neal bhaiGold extended a decline from the highest level in 17 weeks as U.S. housing data that beat estimates supported expectations the Federal Reserve will keep to its plan to reduce stimulus.

Bullion for immediate delivery fell as much as 0.4 percent to $1,325.27 an ounce, and traded at $1,328.25 at 2:15 p.m. in Singapore. The metal climbed to $1,345.46 yesterday, the highest level since Oct. 30, before ending 0.8 percent lower as a report showed new home sales in the U.S. rose to a five-year high.

Gold is headed for a second month of advance, the longest such run since August, as concern that the U.S. recovery may be faltering and unrest in emerging markets boosted demand for a store of value. Bullion rose 10 percent this year, rebounding from the biggest annual decline in more than three decades, even as the Fed started to reduce its asset purchases.

“Bullion fell from investor profit-taking as U.S. home sales rose to a five year high,” James Steel, an analyst at HSBC Securities (USA) Inc., wrote in a note. “The gold decline was cushioned by Eastern Europe tensions. Gold may also have been modestly supported by a move back to flat in the Shanghai Gold Exchange from a recent dip to discount.”

Assets in the SPDR Gold Trust, the biggest bullion-backed exchange-traded product, were unchanged yesterday after gaining for three days, and are heading for the first monthly expansion since December 2012.

Russian President Vladimir Putin ordered military exercises amid deepening tensions in Ukraine, where lawmakers are set to approve Arseniy Yatsenyuk as prime minister today after a three-month uprising that oustedViktor Yanukovych.

Chinese Demand

In China, the largest consumer, volumes for the benchmark contract on the Shanghai Gold Exchange declined yesterday from a two-week high on Feb. 25 as metal for immediate delivery traded at a premium to London prices for the first time in five days.

Gold for April delivery was at $1,328.30 an ounce on the Comex in New York from $1,328 yesterday, when prices climbed to $1,345.60, the highest for a most-active contract since Oct. 30.

Silver fell 0.6 percent to $21.1163 an ounce, paring February’s advance to 10 percent.

Platinum dropped 0.3 percent to $1,426.62 an ounce, declining for a second day and trimming a third monthly advance. Palladium decreased 0.2 percent to $730.95 an ounce, paring the first monthly gain since October.

In South Africa, the Commission for Conciliation, Mediation and Arbitration will convene a joint meeting between the Association of Mineworkers and Construction Union and the world’s three biggest platinum producers on Feb. 28 to resolve a strike that began Jan. 23.