Tags: gold | futures | decline | ETF

Gold Futures Post Longest Slump Since February on ETF Decline

Tuesday, 14 May 2013 03:17 PM

Gold futures fell, capping the longest slump in almost three months, as assets in exchange-traded products backed by the metal extended a slump to the lowest since July 2011.

ETP holdings have tumbled 15 percent this year to 2,225.9 metric tons, after climbing every year since the first product was listed in 2003, data compiled by Bloomberg show. Assets in the SPDR Gold Trust, the biggest product, will probably drop by an additional 2 million to 4 million ounces after slumping 9.7 million ounces since mid-December, Deutsche Bank said today.

“ETF selling continues to weigh on prices,” Frank Lesh, a trader at FuturePath Trading in Chicago, said in a telephone interview. “The overall trend remains bearish.”

Gold futures for June delivery fell 0.7 percent to settle at $1,424.50 an ounce at 1:44 p.m. on the Comex in New York. The price dropped for the fourth straight session, the longest slump since Feb. 20.

The commodity has dropped 15 percent this year, entering a bear market last month as some investors lost faith in the metal as a store of value. The decline spurred demand for bars, coins and jewelry, and futures have climbed 7.8 percent from a 26-month low of $1,321.50 on April 16.

Physical Buyers

“Physical buyers backed off when prices neared $1,500, and we expect some of them to come back to the market after the recent price decline,” said Huang Fulong, an analyst at CITICS Futures Co., a unit of China’s largest listed brokerage. “Any rally will be capped if ETF selling continues.”

Silver futures for July delivery fell 1.3 percent to $23.379 an ounce on the Comex, the biggest decline for a most-active contract since May 1.

On the New York Mercantile Exchange, palladium futures for June delivery advanced 1.2 percent to $727.15 an ounce. Earlier, the price reached $733.80, the highest since April 11. Trading was more than double the average in the past 100 days, according to Bloomberg data.

Platinum futures for July delivery jumped 1.2 percent to $1,501.90 an ounce.

The platinum market last year swung to the biggest deficit since 2002 as supplies fell to a 12-year low because of strikes and work stoppages in South Africa, the world’s biggest producer, according to Johnson Matthey Plc. The palladium shortfall was the largest since 2000, said the London-based metal refiner and producer of pollution-control devices for vehicles.

Anglo American Platinum Ltd., the top platinum producer, said last week it will idle three shafts in South Africa’s Rustenburg region with production capacity to be cut by as much as 350,000 ounces.

Lonmin Plc, the third-largest producer, said operations at its Marikana mine in South Africa were halted after workers refused to go underground.

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Gold futures fell, capping the longest slump in almost three months, as assets in exchange-traded products backed by the metal extended a slump to the lowest since July 2011.
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2013-17-14
Tuesday, 14 May 2013 03:17 PM
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