May 31, 2013, 2:40 p.m. EDT

Gold posts 7th monthly decline in 8 months

By Saumya Vaishampayan and Michael Kitchen, MarketWatch
NEW YORK (MarketWatch) — Gold futures settled below $1,400 Friday to cap a decline for May, the seventh monthly drop in the last eight months.

Gold for August delivery /quotes/zigman/6585799 GCQ3 -1.70% fell $19, or 1.4%, to settle at $1,393 an ounce on the New York Mercantile Exchange’s Comex division. Gold futures rose 1.5% Thursday to close at $1,412 an ounce.

Gold futures fell 5.4% in May, compared with the settlement of $1,472.10 for the most-active contract on April 30.

Friday’s decline in gold futures could have been partly due to profit taking after some strong U.S. economic data, said Vedant Mimani, lead portfolio manager of the Atyant Capital Global Opportunities Fund. But in the bigger picture, futures have been hovering around $1,400, he said.

“That’s been the line in the sand where the bulls and the bears are battling it out right now,” said Mimani.

On Friday morning, Chicago PMI data rose to a reading of 58.7 in May, the best reading in more than a year, beating expectations of 49.9. Separately, the University of Michigan and Thomson Reuters consumer-sentiment index jumped to a final May reading of 84.5, also rising more than economists had forecast.

The dollar reversed its decline Friday, with the ICE dollar index /quotes/zigman/1652083 DXY +0.30% rising to 83.421 in recent trade from late Thursday’s 83.022. A weaker dollar tends to help the prices of gold and other dollar-denominated commodities by making them cheaper for holders of other currencies.

Gold futures posted a loss in May, in line with the improving backdrop that is leading investors away from safe-haven assets like gold. Apart from March, gold futures have fallen each month beginning in October. Those futures are down nearly 17% so far in 2013, according to FactSet data.

“A lot of the macroeconomic concerns that investors have had for buying gold over the past few years are sort of dissipating,” said Carlos Sanchez, director of asset management at CPM Group.

“Going down the list of economic indicators, they lean toward the more positive side, so many are stepping back from safe-haven assets like gold,” he said.

The Thursday advance — which pushed the August contract above $1,400 for the highest settlement for benchmark gold futures in more than two weeks — came on the back of a rise in SPDR Gold Trust /quotes/zigman/41663/quotes/nls/gld GLD -2.03% holdings and a drop in the dollar after disappointing U.S. economic-growth data.

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July silver /quotes/zigman/652548 SIN3 -2.16% shed 45 cents, or 2%, to close at $22.24 an ounce, compared to its 1.1% rise on Thursday.

July copper /quotes/zigman/678445 HGN3 -1.31% lost 2 cents, or 0.7%, to settle at $3.29 a pound.

Copper futures could react to official China manufacturing data due out Saturday. Investors will be watching to see if the government-sponsored Purchasing Managers’ Index matches preliminary results from a privately-compiled version, produced by HSBC and Markit, which showed Chinese manufacturing activity contracting in May.

July platinum /quotes/zigman/9544538 PLN3 -1.83% gave up $20.90, or 1.4%, to close at $1,461.80 an ounce, while September palladium /quotes/zigman/10469735 PAU3 -1.19% dropped $6.90, or 0.9%, to settle at $753.65 an ounce.

http://www.marketwatch.com/story/gol...vel-2013-05-30