Wall Street Rally Cramps Demand for Gold
Source: Associated Press (3/23/09)
"It's going to compete for investment dollars again."
Gold prices declined amid increased appetite for risk on Wall Street as investors cheered the administration's latest steps to help troubled banks.
Treasury Secretary Timothy Geithner announced details Monday of a government-private partnership to buy up bad assets from lenders. A report showing a surprise increase in home sales also gave the market a lift.
"I think stocks could continue (going higher) which would take away some of the usefulness of gold as a safe-haven asset," said Tom Pawlicki, a commodities analyst with MF Global Research in Chicago. "It's going to compete for investment dollars again."
Demand for gold surged last week, jumping 8% on Thursday alone after the Federal Reserve announced plans to pump more than $1 trillion into the financial system. Pawlicki said the gold market was "probably due for a correction after last week's rally."