March 26, 2013, 2:00 p.m. ET.

Gold Recedes Below $1,600 As Cyprus Fears Fade

--Comex April gold futures fell 0.6% to $1,595.70/troy oz

--Easing euro-zone concerns pressured investor demand for a haven

--Brighter U.S. economic data also weighed on gold prices

--Gold's losses cushioned by IMF report showing central banks bought more gold in February


By Tatyana Shumsky
NEW YORK--Gold futures prices settled below $1,600 a troy ounce Thursday for the first time since the Cyprus crisis erupted, as worries about the euro-zone member eased and as U.S. data pointed to economic recovery.

A report showing increased gold purchases by the world's central banks in February helped cushion the fall in futures prices.

The most actively traded contract, for April delivery, fell $8.80, or 0.6%, to $1,595.70 a troy ounce on the Comex division of the New York Mercantile Exchange. This was gold's first close below $1,600 since March 15, though futures prices had slipped below this psychologically important level in Monday's trading.

Worries that Cyprus might default on its debt or that it would confiscate about 10% of all savings deposits had given gold a fillip, helping futures to climb 1.3% over four trading days last week. A new bailout proposal was approved over the weekend, which eased investors' fears and prompted some selling of the metal Tuesday.

While gold is widely considered a haven from political and financial instability, it tends to lose favor with investors when such fears fade.

Gold hovered just below $1,600 in part because investors remain worried about other euro-zone members and their debt struggles, said Bob Haberkorn, senior commodity broker with RJO Futures.

"Cyprus is small potatoes compared with what could come out of Italy and Spain," Mr. Haberkorn said.

Gold prices also fell on data showing the U.S. economic recovery remained on track last month. U.S. orders for durable goods rose 5.7% in February from a month earlier, while a separate report showed home prices rose more than expected in January from a year earlier.

Investors tend to shed haven assets like gold in favor of economically sensitive investments like equities when they expect the economy to improve.

However, gold bulls took solace in data showing the world's central banks continued to stock up on bullion in February. The International Monetary Fund said Russia bought 225,000 troy ounces of gold last month to increase its gold stockpile to 31.4 million troy ounces. The central bank of Turkey was another notable gold buyer in February, adding 185,000 troy ounces to increase its bullion holdings to 12.08 million troy ounces.

Central banks have been net buyers of gold for 23 straight months through January, the IMF said. February data for global gold holdings are incomplete, as not all countries have reported their data to the IMF.

"That's keeping gold from really falling out of bed," said Adam Klopfenstein, senior market strategist with Archer Financial Services.

Gold is widely considered a currency alternative and central banks have been net purchasers of the yellow metal in recent years as they sought to diversify their official currency reserves away from the dollar and the euro in reaction to sovereign-debt problems in Europe and the U.S.

Gold Recedes Below $1,600 As Cyprus Fears Fade - WSJ.com