Bloomberg News

Gold Drops From Five-Week High Amid Renewed Europe Debt Concern

October 28, 2011

Oct. 28 (Bloomberg) -- Gold declined from a five-week high on renewed concerns that Europe’s debt crisis will hamper global growth, damping prospects for commodity demand.

Italy’s borrowing costs rose to a euro-era record at a sale of three-year bonds. The Standard & Poor’s GSCI Index of 24 raw materials slumped as much as 1.3 percent. A rebound in the dollar also reduced demand for gold as an alternative asset.

“Fresh fears about Italy are pushing all commodities, including gold, lower,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview. “We are also witnessing some profit taking.”

Gold futures for December delivery fell less than 0.1 percent to settle at $1,747.20 an ounce at 1:45 p.m. on the Comex in New York, halting a rally that began Oct. 20. Prices climbed 6.8 percent this week, the most since January 2009.

Earlier, the metal reached $1,754, the highest since Sept. 23. European leaders agreed yesterday on new measures to tackle the region’s debt crisis.

Silver futures for December delivery rose 0.5 percent to close at $35.288 an ounce in New York. The metal gained 13 percent for the week.

On the New York Mercantile Exchange, platinum futures for January delivery advanced 0.6 percent to $1,651.80 an ounce. The metal jumped 9.4 percent for the week, the biggest gain since May 2008. Palladium futures for December delivery fell 0.2 percent to $668.35 an ounce, paring this week’s gain to 8.1 percent.

--With assistance from Nicholas Larkin in London. Editors: Steve Stroth, Daniel Enoch

To contact the reporter for this story: Debarati Roy in New York at droy5@bloomberg.net.

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


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