Bloomberg News

Gold Falls in New York as Europe Concerns Fuel Gains in D

February 27, 2012

Gold declined for a second session in New York as a rise in the dollar curbed demand for the precious metal as an alternative investment.

The dollar gained against the euro as Moody’s Investors Service said Greek default risk “remains high” after the nation formally asked investors to exchange their holdings of government debt for new securities last week. International Monetary Fund Managing Director Christine Lagarde said the world economy is “not out of the danger zone.”

“The dollar is up on the day, and more than anything today is a currency play” for gold, William O’Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey, said in a telephone interview. “The market is digesting the news out of Europe from over the weekend.”

Gold futures for April delivery fell 0.1 percent to settle at $1,774.90 an ounce at 1:39 p.m. on the Comex in New York. Prices gained 2.9 percent last week. The metal is up 13 percent this year after a 10 percent increase in 2011, an 11th consecutive annual gain.

Holdings in bullion-backed exchange-traded products rose to a record 2,396.9 tons on Feb. 24, data compiled by Bloomberg show.

John Paulson told investors on Feb. 24 that his $1.2 billion Gold Fund, which declined 11 percent last year, will outperform his other strategies over five years, according to a person with knowledge of the matter. Paulson & Co, which cut its stake in the three months to Dec. 31, is still the biggest investor in the SPDR Gold Trust, the largest bullion-backed ETP.

Silver for May delivery advanced 0.5 percent to $35.604 an ounce. The metal has rallied 28 percent this year, making it the best-performing precious metal.

On the New York Mercantile Exchange, palladium for June delivery dropped 0.8 percent to $707.40 an ounce. Platinum for April delivery declined 80 cents to $1,714.30 an ounce.

To contact the reporters on this story: Joe Richter in New York at jrichter1@bloomberg.net

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


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