Gold Falls, Heading for Weekly Drop on Speculator, Mining Salesadmin
Gold fell, heading for the first weekly drop since early January, on selling by commodity speculators who had helped drive prices to a six-month high two days ago. Mining companies were also sellers.
Speculators sold gold when prices climbed to a 26-year high of $730.40 an ounce in May, U.S. government figures show. They probably bought more bullion overnight, on top of holdings that were already the highest since prices peaked last year, John Reade, London-based UBS AG analyst, wrote in a report today.
“It seems the buying signal is running out of steam,” said Bernard Sin, chief trader at MKS Finance SA in Geneva. “We saw some producer selling.”
Gold for immediate delivery fell $4.20, or 0.6 percent, to $665.55 an ounce at 11:22 a.m. London time. Prices are down 0.2 percent this week after gaining 9.8 percent in the previous five weeks. Bullion may reach $660 before the rally resumes, Sin said.
“Some profit taking is being seen this morning and is likely to be the theme” next week because of holidays in China and the U.S., James Moore, an analyst in Kettering, England, for TheBullionDesk.com, said in an e-mailed message. U.S. futures trading is closed on Feb. 19 for Presidents’ Day, and the China Lunar New Year holiday runs all week.
Speculators who own gold futures are “the wrong types of investors” to keep a gold rally going, Reade said in a report yesterday.
After prices peaked in May, speculators reduced their holdings for four consecutive weeks, according to the U.S. Commodity Futures Trading Commission.
Unlike then, demand from jewelers in India, the world’s biggest buyers of gold, is still “reasonably good,” according to Reade’s report today.
Gold had climbed on Feb. 14 to $671.94, the highest since July, as the dollar’s decline against the euro increased the metal’s appeal as an alternative asset. The dollar was little changed today against the euro.
Silver dropped 7 cents to $13.905 an ounce today. Palladium declined $3 to $338 and platinum dropped $14 to $1,196.50.