Gold Falls as U.S. Housing Gains Boost Equities Close to Record
May 23 (Bloomberg) — Gold futures fell for the second time in three days as signs of a recovery in the U.S. economy curbed demand for the precious metal as an alternative asset.
Sales of new homes increased 6.4 percent, the most since October, government data showed. The Standard & Poor’s 500 Index of equities gained, approaching a record. Gold has dropped 7.2 percent from a six-month high in March as the economy rebounded from a winter lull.
“The housing data is another indication that the U.S. economy is improving,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview. “Also, the stock market continues to march ahead.”
Gold futures for August delivery fell 0.3 percent to settle at $1,291.90 an ounce at 1:44 p.m. on the Comex in New York. This week, the price dropped 0.1 percent.
The metal’s 30-day volatility has dropped to the lowest in more than a year, and this month, futures have traded in a range of $44.
Last year, gold slumped 28 percent, the most in three decades, on concern that the Federal Reserve would taper the pace of monetary stimulus as the economy gained traction.
The Fed pared its monthly asset buying to $45 billion in April, its fourth straight $10 billion cut. Gold climbed 70 percent from December 2008 to June 2011 as the central bank bought debt and held borrowing costs near zero percent.
In 2014, the metal has climbed 7.5 percent, partly on demand for a haven amid escalating tensions between Russia and Ukraine.
Barclays Fined
Barclays Plc was fined 26 million pounds ($44 million) by Britain’s markets regulator after a trader was found to have manipulated the price of gold in 2012.
The trader, Daniel Plunkett, “exploited the weaknesses in Barclays’s systems and controls to seek to influence” the gold fixing on June 28, 2012, according to U.K. Financial Conduct Authority. His actions allowed Barclays to avoid making a $3.9 million payment to a client, though the bank later compensated the customer in full, the regulator said.
Silver futures for July delivery fell 0.5 percent to $19.418 an ounce on the Comex. This week, the price rose 0.5 percent.
On the New York Mercantile Exchange, platinum futures for July delivery dropped 1.4 percent to $1,472.80 an ounce, the biggest drop since May 7. Yesterday, the metal reached $1,497.80, the highest since Sept. 9.
Representatives from the world’s three biggest platinum producers and the main union at their South African mines will continue pay talks tomorrow in a bid to end a strike that has crippled output for 18 weeks.
Palladium futures for June delivery fell 0.6 percent to $831.45 an ounce. Yesterday, the price reached $839.55, the highest since Aug. 1, 2011.
–With assistance from Kevin Crowley in Johannesburg and Suzi Ring in London.
To contact the reporter on this story: Debarati Roy in New York at droy5@bloomberg.net To contact the editors responsible for this story: Millie Munshi at mmunshi@bloomberg.net Patrick McKiernan
