Thread: Gold falls more than 1 pct as commodities dip

PRECIOUS-Gold falls more than 1 pct as commodities dip


Wed May 1, 2013 4:20pm EDT


By Frank Tang NEW YORK, May 1 (Reuters) - A commodities selloff sent gold prices more than 1 percent lower on Wednesday, the biggest dailydrop since bullion's historic decline in mid-April, although the metal pared some losses after the Federal Reserve stuck to its monetary stimulus plan. Silver and platinum group metals also trimmed losses afterthe U.S. central bank said it would continue buying $85 billion in bonds each month to keep interest rates low and spur growth,but added it could lift or taper this pace of purchasesdepending on the economy's path. Bullion had lost $225 per ounce between April 12 and 16, its biggest two-day plunge in over 30 years. Since then, strongphysical demand around the world, especially in top bullionconsumers China and India, has cut that drop by more than half. "I don't believe the fundamental reason of owning gold haschanged one iota," said Michael Cuggino, portfolio manager atthe Permanent Portfolio, which has $15 billion in fund assets. "You still have negative short-term real interest rates, andeasy monetary policies around the world with liquidity beingcreated," Cuggino said. Spot gold fell 1.3 percent to $1,457.90 an ounce by3:11 p.m. EDT (1911 GMT). U.S. Comex gold futures for June delivery settleddown $25.90 at $1,446.20 an ounce. Turnover was light given gold's moves. Trading volumetotaled around 167,000 lots, about 30 percent below its 30-dayaverage at 232,300, preliminary Reuters data showed. Earlier in the session, gold fell more than 2 percent - itsbiggest one-day drop since April 15, when it lost 8.5 percent. Industrial commodities tumbled, with signs ofslowing manufacturing growth in the United States and Chinaweighing on demand hopes and hitting gold's inflation-hedgeappeal. After bullion's sharp drop, shops selling gold coins,jewelry and bars around the world reported an unprecedentedsurge in demand and mints and refineries were working overtimeto keep up. "Some of that out-of-control retail buying has now beensatisfied," said Frank McGhee, head precious metals trader atIntegrated Brokerage Services LLC. DIVERGENCE BETWEEN ETFS, COINS Gold's historic selloff last month has intensified adisconnect between funds that sold on dissatisfaction overbullion's underperformance, and individual investors who couldnot get enough physical gold coins and bars at bargain prices. In April, holdings at the world's largest gold-backedexchange-traded fund (ETF), SPDR Gold Trust , posted the biggest monthly outflow in tonnageterms since its launch in November 2004. In contrast, gold coins and bars, favorites amonglonger-term individual investors who want to gain exposure tothe precious metal, soared after gold's spectacular selloff. Sales of American Eagle gold coins jumped tenfoldyear-on-year in April to 209,500 ounces, the highest level sinceDecember 2009, U.S. Mint data showed. Among other precious metals, silver fell 2.3 percentto $23.71 an ounce. Platinum dropped 1.9 percent to$1,475.50 an ounce, while palladium was down 1.3 percentat $685.72. 　

http://www.reuters.com/article/2013/05/01/markets-precious-idUSL3N0DI0YN20130501