Tags: Gold | Societe | Generale | Bubble

Gold Slides 1.6% as Societe Generale Sees ‘Bubble’

Tuesday, 02 Apr 2013 05:15 PM

Gold tumbled 1.6 percent Tuesday, the most in more than five weeks, as physical demand ebbed and a stronger dollar trimmed demand for the precious metal as an alternative investment.

Global bullion holdings in exchange-traded products tumbled 6.9 percent last quarter, the most since at least 2004. The dollar rose for the first time in four sessions against a basket of six currencies. Cypriot government officials will seek easier bailout terms in talks with the European Union and the International Monetary Fund today.

Gold is in a “bubble” and will head into a so-called bear market as improving U.S. economic growth prompts the Federal Reserve to curb stimulus efforts, Societe Generale SA analysts including London-based Robin Bhar said in a report Tuesday. The U.S. Mint’s sales of American Eagle gold coins slumped 23 percent in March from a month earlier to 62,000 ounces.

“Lower physical demand and dollar strength are working against gold,” Bill O’Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey, said in a telephone interview. “The safe-haven premium is not high as Europe is not falling apart even though slowdown concerns remain.”

In New York, gold futures for June delivery fell 1.6 percent to settle at $1,575.90 an ounce at 1:35 p.m. on the Comex, the biggest decline since Feb. 20.

Prices have fallen 6 percent this year, after 12 straight annual gains, as a rally in equities and stronger economic growth cut demand for the precious metal as a haven.

No ‘Interest’

“There’s not much physical interest anywhere,” Bernard Sin, head of currency and metal trading at bullion refiner MKS (Switzerland) SA in Geneva, said today in a telephone interview.

Silver futures for May delivery retreated 2.5 percent to $27.248 an ounce in New York, after reaching $27.15, the lowest since Aug. 3. The metal closed at $27.944 Monday, a 20 percent drop from an Oct. 4 high, meeting the common definition of a bear market. Trading was 37 percent higher than the 100-day average for this time of day, data compiled by Bloomberg show.

On the New York Mercantile Exchange, platinum futures for July delivery dropped 1.5 percent to $1,574.20 an ounce, the biggest drop since Feb. 21.

Palladium futures for June delivery retreated 1.9 percent to $769.40 an ounce. Trading was 39 percent below the 100-day average for this time of day.

© Copyright 2015 Bloomberg News. All rights reserved.

1Like our page

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

© Newsmax Media, Inc.
All Rights Reserved