BLBG: Gold Declines as Rally to Record Spurs Some Investors to Sell
By Kim Kyoungwha
Nov. 18 (Bloomberg) -- Gold fell after a rally to a record prompted some investors to sell the precious metal. Silver, platinum and palladium also retreated.
“There’s a burden for investors to keep chasing after gold in the short run,” said Steve Chun, a trader at Hyundai Futures Co. “We’re expecting a brief consolidation before bullion tests even higher as more and more investors” want to own gold.
Gold for immediate delivery fell as much as 0.5 percent to $1,136.20 an ounce after earlier gaining to $1,144.42, an all- time high. The metal was at $1,136.60 at 12:41 p.m. in Singapore. Futures also decreased after rising to a record.
The rally this month has pushed spot gold’s 14-day relative strength index to more than 70, a level regarded by some investors and technical analysts as signaling a decline. Today’s reading for immediate-delivery gold is 74, and the measure has been at more than 70 for four straight days.
Gold is up 29 percent this year as central banks, pension funds and individual buyers seek to protect their wealth against currency debasement and inflation. Policy makers worldwide have set interest rates near zero and spent $2 trillion to pull the world economy out of the worst recession since World War II.
The International Monetary Fund said this week it sold 2 metric tons of gold, valued at about $71.7 million, to Mauritius. The sale followed India’s $6.7 billion purchase of 200 tons, which was announced earlier this month. The IMF plans to sell a total of 403.3 tons to bolster its finances.
‘Pullback’
“There could be a pullback, investors shouldn’t be nervous about that,” said Aaron Smith, managing director at Superfund Financial Singapore Pte, advising “long-term investors” to maintain their positions. “It won’t be a surprise that we see $1,200” an ounce, Smith said.
The Dollar Index, which tracks the dollar against six major currencies and has lost 7.4 percent this year, was little changed at 75.296 after rising 0.6 percent yesterday. Gold typically moves inversely to the U.S. currency.
European Central Bank President Jean-Claude Trichet said yesterday a strong dollar is in the world’s best interests. The comments came after a Bank of England policy maker said Britain risks inflation if it maintained stimulus spending too long.
Silver held in ETF Securities Ltd.’s exchange-traded products increased 0.7 percent to a record 22.506 million ounces on Nov. 16, according to the company’s Web site. Palladium holdings rose 1.7 percent to a record 591,372 ounces and gold assets increased 0.3 percent to 7.992 million ounces.
Gold for December delivery rose to a record $1,144.70 an ounce on the New York Mercantile Exchange’s Comex division, before trading 0.2 percent lower at $1,136.70.
Silver shed 0.4 percent to $18.3438 an ounce after touching $18.505, the highest level since July 16, 2008. Platinum fell 0.6 percent to $1,447.50 an ounce and palladium dipped 0.2 percent to $372 an ounce.
To contact the reporter on this story: Kyoungwha Kim in Singapore at Kkim19@bloomberg.net
