Gold Slides as Investors Move into Stocks

Source:

"Tentative optimism about the economy in the after-glow of last week's G20 meeting bolstered share prices and lessened the allure of gold."

Gold slid almost 2% in Europe on Monday as investors opted to move away from the perceived safety of bullion and load up on stocks, taking a view that the global downturn might be in the process of stabilizing.

Spot gold was quoted at $878.75/879.85 an ounce at 1234 GMT from $892.50 late in New York on Friday.

Tentative optimism about the economy in the after-glow of last week's G20 meeting bolstered share prices and lessened the allure of gold. Global stocks as measured by MSCI's all-country index rose almost half a percent on the day.

"After the G20, people are willing to believe there's an opportunity for some green shoots of recovery and stock markets are looking buoyant as a result," said Simon Weeks, managing director of precious metals at ScotiaMocatta in London.

"You'd expect some unwinding of gold's safe haven status and a recovery in some of the other metals that had been under the cosh on the overall economic situation," he added.

Meanwhile, the world's largest gold-backed exchange-traded fund, New York's SPDR Gold Trust, said it recorded a small outflow on Friday from record levels.

The recent fall in prices has revived demand from another source, however, with Indian jewelry sales picking up ahead of the key gold-buying Akshaya Tritya festival later this month.

"The gold market is showing clear signs of improved near-term fundamentals: scrap supply is much slower since gold fell below $930/oz," UBS said in a note.

"Patchy jewelry demand was seen late last week when gold was near the week's lows; and this morning our traders report Indian clients calling to buy gold. . .because it is now cheap."

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