Bloomberg News

Gold Drops From Two-Week High Before Slovakia Bailout Fund Vote

October 11, 2011

Oct. 11 (Bloomberg) -- Gold declined from a two-week high as investors awaited a vote in Slovakia to approve the European bailout fund.

Bullion for immediate delivery shed as much as 0.6 percent to $1,666.65 an ounce, after climbing to $1,684.63 an ounce, the highest level since Sept. 23. It traded at $1,668.25 at 4:10 p.m. in Singapore. The metal jumped 2.4 percent yesterday, the most since Sept. 8. Futures for December were little changed at $1,669.90 an ounce.

“A plan to end Europe’s debt crisis is bearish for gold, however until investors believe whatever plan they have is going to work, gold will be supported,” Wang Xiaoli, chief investment strategist at Citic Futures Co., said in an e-mail today.

Slovakia is the only country in the 17-nation euro area that hasn’t ratified a planned reinforcement of the European Financial Stability Facility. The nation’s four-part coalition yesterday failed to resolve a dispute with rebel lawmakers, threatening to delay measures to stem Europe’s debt crisis.

U.S. stock futures declined and the euro was little changed after reaching a three-week high against the dollar yesterday as Slovakia’s parliament prepared to vote. German Chancellor Angela Merkel and French President Nicolas Sarkozy pledged at the weekend to deliver a plan by Nov. 3 to stem the debt crisis.

“We’re in the peak seasonal demand period now and that should also help buoy gold prices,” said Wang, who was ranked fifth in a Futures Daily and Securities Times poll of China gold analysts.

In India, the world’s largest consumer, the peak-demand period began in August with Eid, continues in October with Diwali, and is followed by the traditional wedding season. In China, the second-biggest buyer, demand typically picks up during the National Day holidays at the start of October through till the Lunar New Year in January.

Cash silver lost 0.9 percent to $31.8237 an ounce after climbing 1.5 percent to $32.565 an ounce. Spot platinum was little changed at $1,521.75 an ounce, while palladium dropped 0.9 percent to $610.13 an ounce.

--Editors: Ovais Subhani, Jarrett Banks

To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net


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