Gold dropped as some traders deemed an advance to an almost four-month high as excessive and as investors awaited clues on when U.S. policy makers may begin raising interest rates. Silver declined.
Bullion rose 1.3 percent last week, capping the longest run of weekly gains since 2011, partly as a parent company of Portugal’s second-biggest bank missed debt payments, renewing concern that Europe hasn’t resolved its debt problems. The advance sent gold near a level that signals to some traders that prices may fall. Federal Reserve Chair Janet Yellen will deliver testimony to Congress this week.
Gold climbed 9.6 percent this year, rebounding from the biggest annual drop in three decades, as the Fed pledged to keep interest rates low for a “considerable time” and amid tension in the Middle East and Ukraine. While hedge funds and other money managers are the most bullish on gold since 2012, Goldman Sachs Group Inc.’s Jeffrey Currie said July 11 he’s keeping his view that gold will decline by the end of the year.
“From a technical perspective, prices appear a mite overstretched,” Abhishek Chinchalkar, an analyst at Mumbai-based AnandRathi Commodities Ltd., said in a report today. “With fund positioning so overstretched on the long side, gold will be vulnerable to a severe pullback in case Yellen’s remarks to Congress are not deemed as being dovish.”
Gold for August delivery fell 1.5 percent to $1,317.50 an ounce by 7:30 a.m. on the Comex in New York. It rose the past six weeks and reached $1,346.80 on July 10, the highest since March 19. Bullion for immediate delivery dropped 1.6 percent to $1,317.01 in London, according to Bloomberg generic pricing.
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