Gold Falls As Stock Recovery Reduces Safe Haven Demand

Gold held a retreat from a five-week high as a rebound in global equities reduced demand for a haven. Silver, platinum and palladium advanced.

Bullion for immediate delivery fell as much as 0.3 percent to $1,234.74 an ounce, and traded at $1,238.24 at 2:21 p.m. in Singapore, according to Bloomberg generic pricing. The metal last week capped the first back-to-back weekly gain since July after rising to $1,249.75 on Oct. 15, the highest price since Sept. 11.

Gold held losses as the Bloomberg Dollar Spot Index rose amid prospects for higher U.S. borrowing costs, with Federal Reserve policy makers preparing to end an asset-purchase program this month while counterparts in Europe weigh further stimulus. The MSCI All-Country World Index of equities extended an advance from an eight-month low, rebounding after four weekly losses that was the longest run of declines in more than a year.

“As calm returns to equity markets, demand for gold decreases,” said Lv Jie, an analyst at Cinda Futures Co. in Hangzhou, China. “As Europe’s economy continues to show weakness, the dollar will further strengthen against the euro in the medium term as monetary policies diverge. That makes it difficult to alter the bearish outlook for gold.”

Gold for December delivery traded little changed at $1,238.60 an ounce on the Comex in New York. Futures climbed to $1,250.30 on Oct 15, the highest price Sept. 11. The net-long position in futures and options jumped 39 percent in the week to Oct. 14, snapping the longest run of reductions since 2010, according to U.S. government data.

Silver for immediate delivery gained 0.5 percent to $17.358 an ounce, rebounding from a weekly decline. Spot platinum rose 0.6 percent to $1,268.75 an ounce after ending last week little changed. Palladium rose 0.5 percent to $758.25 an ounce, after the biggest weekly loss in more than a month.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza