Gold Weakens as Manufacturing Data Improves
By Glenys Sim
Gold declined for a second day as manufacturing in the U.S. and China improved, adding to evidence of a global recovery, while data showed holdings in exchange- traded products dropped to the lowest level in three months.
Spot gold fell as much as 0.3 percent to $1,658.10 an ounce and traded at $1,659.40 at 12:51 p.m. in Singapore, after dropping from a two-week high yesterday. Holdings in ETPs lost 0.2 percent to 2,381.568 metric tons yesterday, the smallest amount since Feb. 1, according to data tracked by Bloomberg.
Manufacturing in the U.S. and China grew in April at close to the fastest rates in a year, increasing speculation that the world’s biggest economies may withstand the fallout from the debt crisis in Europe. Alan Krueger, chairman of the White House Council of Economic Advisers, said yesterday the European crisis poses “some risk” to the U.S. and global economy. Monthly gold-coin sales by the U.S. Mint tumbled in April to the lowest level since June 2008, according to figures on April 30.
The “dollar rallied on the release of better-than-expected U.S. manufacturing data, and gold prices fell,” James Steel, an analyst at HSBC Securities (USA) Inc., wrote in a note. “An improving U.S. economy appears to be eroding demand for gold coins. Further liquidation in gold exchange-traded funds also weighed on prices.”
June-delivery bullion was little changed at $1,660.50 an ounce on the Comex in New York. The dollar held gains against a six-currency basket before a private jobs report that is forecast to show U.S. companies added workers in April.
While gold has risen 6.1 percent this year on expectations of additional easing from the Federal Reserve, four U.S. central bankers said yesterday that more stimulus probably won’t be needed. The Fed bought $2.3 trillion of bonds in two rounds of so-called quantitative easing from December 2008 to June 2011 to lower borrowing costs, cut joblessness and spur growth.
HSBC Securities on April 29 reduced its forecast for average gold prices this year to $1,760 from $1,850, with Steel citing “a steep reduction in market expectations of further quantitative easing or other monetary stimulus.”
Cash platinum, this year’s best-performing precious metal, fell 0.2 percent to $1,568.75 an ounce. One ounce of platinum bought as little as 0.9377 ounce of gold yesterday, the least since Feb. 16, according to data compiled by Bloomberg. The ratio was last at 0.9439.
Spot silver dropped 0.2 percent to $30.9025 an ounce, set for a third day of losses. Palladium, this year’s worst- performing precious metal, fell 0.4 percent to $678 an ounce.