Gold declined below $1,700 an ounce
to the lowest level in almost three weeks in New York, extending
last week’s drop, as a stronger dollar curbed demand for the
metal as an alternative investment.
The dollar rose against the euro and European equities fell
amid signs U.S. lawmakers may fail to reach an agreement on
budget cuts. Spain’s People’s Party won a parliamentary
majority, making the ousted Socialists the fifth European
government to be toppled amid the region’s debt crisis. Holdings
in exchange-traded products backed by gold climbed to a record.
“We have a firmer dollar, and that is negative for gold,”
Peter Fertig, owner of Quantitative Commodity Research Ltd. in
Hainburg, Germany, said by phone today. “There might be some
small bargain-hunting at these levels, but I’m looking more for
the downside in gold than the upside.”
Gold for December delivery slipped as much as 1.5 percent
to $1,698.70 an ounce, the lowest price since Nov. 1, and was at
$1,712.80 by 9:16 a.m. on the Comex in New York. The metal slid
3.5 percent last week. Immediate-delivery gold was 0.7 percent
lower at $1,711.53 in London.
Gold’s drop today took it below its 50- and 100-day moving
averages.
The need to “cover losses in other sectors will likely
keep gold under pressure in the short term,” James Moore, an
analyst at TheBullionDesk.com in London, wrote today in a
report. A drop below the 50- and 100-day moving averages may
push gold toward $1,680, he said.
Record Prices
Bullion is in the 11th year of a bull market and futures
reached a record $1,923.70 an ounce on Sept. 6 as investors
sought to diversify away from equities and some currencies.
Holdings in gold-backed ETPs climbed 16.5 metric tons on Nov. 18
to an all-time high of 2,339.97 tons, data compiled by Bloomberg
show.
Today is the deadline for the U.S. Congressional Budget
Office to receive a plan that it can analyze before a so-called
supercommittee’s Nov. 23 target date for reaching an agreement.
It was highly unlikely that the panel’s talks could be salvaged,
a Democratic aide, who requested anonymity, said in an e-mail
yesterday.
While physical demand for bullion has weakened since
September, Barclays Capital said it remains “positive” on the
outlook for the metal, citing stronger investment interest.
Prices will average $1,875 this quarter and $2,000 next year, it
said in an e-mailed report.
Gold has averaged about $1,705 so far this quarter and
$1,563 in 2011, figures compiled by Bloomberg show.
Silver for March delivery dropped 3.4 percent to $31.37 an
ounce. Palladium for December delivery was 1.9 percent lower at
$593.45 an ounce. Platinum for January delivery fell 1.2 percent
to $1,569.50 an ounce.
To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net
To contact the editor responsible for this story: John Deane at jdeane3@bloomberg.net
