Bloomberg News

Gold Declines as Euro’s Rebound Erodes Demand for Metal Haven

June 02, 2011

June 2 (Bloomberg) -- Gold futures fell the most in two weeks as the euro climbed, eroding demand for the precious metal as a haven asset. Silver also tumbled.

The euro rose as much as 1.3 percent against the dollar to a three-week high after German Chancellor Angela Merkel said she is committed to the common currency. Last month, gold fell 1.3 percent after reaching a record $1,557.40 an ounce on May 2.

“With the euro stable, you’re losing the flight-to-quality bid in gold,” said Adam Klopfenstein, a senior strategist at Chicago broker Lind-Waldock.

Gold futures for August delivery fell $10.50, or 0.7 percent, to settle at $1,532.70 at 1:38 p.m. on the Comex in New York, the biggest drop since May 17. The metal still has gained 25 percent in the past year.

The dollar declined as much as 0.6 percent against a basket of major currencies as bearish reports on the economy spurred concern that the recovery is waning.

“A decrease in economic growth takes away the argument from the inflation camp to buy gold,” Klopfenstein said.

The Federal Reserve has kept its benchmark interest rate at zero percent to 0.25 percent since December 2008 and pledged to buy $600 billion in Treasuries through the end of June to help revive the economy.

Copper dropped as much as 1.8 percent, and U.S. equities slumped for the second straight day.

“Traders are out of risk assets,” said Frank Lesh, a trader at FuturePath Trading LLC in Chicago. “Demand for gold and metals is going to suffer.”

Silver futures for July delivery declined $1.492, or 4 percent, to $36.202 an ounce on the Comex, marking the biggest slide since May 11. The price has fallen 27 percent from a 31- year high of $49.845 on April 25.

Palladium futures for September delivery dropped $8.70, or 1.1 percent, to $770.40 an ounce on the New York Mercantile Exchange.

Platinum futures for July delivery declined $6.10, or 0.3 percent, to $1,817.80 an ounce.

--Editors: Steve Stroth, Patrick McKiernan

To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net.


Hollywood Goes YouTube
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus