June 17 (Bloomberg) -- Gold is poised for a second weekly decline as growing evidence of an economic slowdown and the dollar’s strength curb demand for commodities.
Immediate-delivery gold dropped as much as 0.3 percent to $1,525.73 an ounce before trading at $1,526 at 2:35 p.m. in Singapore. The metal lost 0.3 percent this week after a 0.7 percent drop the previous week. The August-delivery contract decreased 0.2 percent to $1,527.60. Cash silver lost 2.4 percent this week and was set for a third weekly decline.
The Standard & Poor’s GSCI Index of 24 commodities weakened 4.1 percent this week, heading for its first decline since the week ended May 6, after manufacturing in the Philadelphia region unexpectedly contracted in June. Americans’ views on the economy’s outlook also soured. The Dollar Index, a six-currency gauge of the dollar’s value, rose 1.1 percent this week, following a jump of 1.4 percent the previous week.
“With a decline in commodities and the dollar creeping higher, gold lacked momentum this week to break its lull,” said Hwang Il Doo, a Seoul-based senior trader at KEB Futures Co. Still, the dip may be a good buying opportunity as the Greek debt crisis “shows no signs of ending.”
The Federal Reserve Bank of Philadelphia’s general economic index fell to minus 7.7, the lowest since July 2009, from 3.9 the prior month, data showed yesterday. Readings less than zero signal contraction. The Bloomberg gauge of economic expectations slumped to minus 31 this month, the weakest since March 2009.
German Chancellor Angela Merkel and French President Nicolas Sarkozy will meet today in Berlin, with pressure rising for the leaders to reach an accord on a rescue for Greece. EU finance ministers agreed on June 14 to reconvene on June 19 after they failed to reconcile a German-led push for bondholders to shoulder part of the cost of a new plan for Greek aid.
Fifteen of 23 traders, investors and analysts surveyed by Bloomberg said gold will rise next week. Five saw lower prices and three were neutral. Assets held in exchange-traded products stood little changed at 2,053.204 tons yesterday, according to Bloomberg data. Holdings hit a record 2,114.6 tons in December.
Gold is up 7.5 percent this year, reaching an all-time high of $1,577.57 an ounce on May 2, as investors seek precious metals as a protection of wealth against rising inflation and currency debasement.
Slowing economic growth generates “political panic,” which in turn leads to stimulus incentives, Guild Monty, chief executive officer at Guild Investment Management Inc, wrote in a note. “Look for another major rally in gold, oil, commodities and stocks,” Monty said.
Cash silver declined 0.7 percent to $35.32 an ounce after ending last week at $36.1825. Spot palladium gained 0.4 percent to $760.50 an ounce, trimming its weekly loss to 6.4 percent. Platinum rose 0.4 percent to $1,765.75 an ounce, reducing this week’s loss to 3.7 percent.
--Editors: Ovais Subhani, Jake Lloyd-Smith
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