Gold Declines on Investor Sales
Source: Bloomberg, Pham-Duy Nguyen (5/28/10)
"Given gold's relative strength, there's a case for lightening the load."
In May, the S&P 500 Index headed for the biggest drop since February 2009, and the Reuters/Jefferies CRB Index of 19 raw materials has dropped 7.5%. Gold was poised for the second straight monthly gain after reaching a record $1,249.70/oz. on May 14.
"Overall, it's been the most difficult month for most markets in over a year," said Kevin Davitt, a senior market strategist at International Futures Group. "Given gold's relative strength, there's a case for lightening the load."
Gold futures for August delivery fell $6.30, or 0.5%, to $1,208.20 at 11:53 a.m. on the Comex in New York. A close at the price would mark the biggest drop for a most-active contract since May 21. The metal has climbed 2.3% this month.
This month, holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, surged to a record, and gold-coin purchases soared on demand for a hedge against the euro amid Europe's sovereign-debt crisis.
"Continued currency concerns and jittery markets will probably bolster a case for gold," Davitt said.
Deutsche Bank AG boosted its forecast for gold on average in the fourth quarter by 19% to $1,400. The third-quarter estimate was an average $1,200.
In the near term, "we expect only modest strength as the market grapples with deflationary fears over the next quarter," Deutsche Bank said. "Thereafter, we anticipate investors may once again begin to worry about future inflation."
Silver futures for July delivery fell 13.3 cents, or 0.7%, to $18.335/oz. on the Comex.
Platinum futures for July delivery dropped $2.20, or 0.1%, to $1,550.70/oz. on the New York Mercantile Exchange.
Palladium futures for September delivery climbed $2.50, or 0.5%, to $467.55/oz.