Bloomberg News

Gold Falls to Lowest in More Than Two Weeks on Stimulus Outlook

June 11, 2013

Gold futures declined to the lowest price in more than two weeks on speculation that central banks will curb stimulus, lowering demand for the precious metal as a store of value.

Standard & Poor’s lifted its outlook for the U.S.’s AA+ credit rating yesterday to stable from negative, citing receding fiscal risks. Bank of Japan officials today left a lending program unchanged, adding to signs that global policy makers may step back from stimulus measures. Chinese markets are closed today and tomorrow for holidays.

“It’s the stimulus story today,” David Meger, the director of metal trading at Vision Financial Markets in Chicago, said in a telephone interview. “Also, physical demand is slow as the Chinese markets are shut.”

Gold futures for August delivery slid 0.6 percent to settle at $1,377 an ounce at 1:40 p.m. on the Comex in New York, after touching $1,364.50, the lowest for a most-active contract since May 23.

Federal Reserve Bank Chairman Ben S. Bernanke said last month that the central bank could curtail its $85 billion monthly bond purchases if the U.S. employment outlook shows a sustainable improvement.

Gold Volatility

Gold’s 60-day historical volatility was at 28.8 percent yesterday, the highest since December 2011 and up from 12.3 percent two months earlier, according to data compiled by Bloomberg.

The metal tumbled 2.3 percent on June 7 after the government reported U.S. payrolls increased more than forecast in May. Prices are down 18 percent this year as some investors lost faith in the precious metal as a store of value and an improving U.S. economy increased speculation the Fed may scale back quantitative-easing measures that helped bullion cap a 12-year bull run in 2012.

Newcrest Mining Ltd. (NCM), Australia’s largest gold producer, said last week it will write down the value of its assets by as much as A$6 billion ($5.6 billion) after the slump in prices.

Holdings in exchange-traded products fell 6.1 metric tons to 2,129.8 tons yesterday, the lowest since April 2011, according to data compiled by Bloomberg.

Silver futures for July delivery fell 1.3 percent to $21.646 an ounce in New York, dropping for the second time in three sessions.

On the New York Mercantile Exchange, platinum futures for July delivery slumped 1.8 percent to $1,479.90 an ounce, the most since May 10. Palladium futures for September delivery slipped 2.2 percent to $752.50 an ounce, the most since May 7. Trading dropped 42 percent compared with the average in the past 10 days for this time, according to Bloomberg data.

To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; 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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