Tags: Gold | Drop | Europe | Turmoil

Gold Heads for Biggest Weekly Drop Since March on Europe Turmoil

Friday, 11 May 2012 03:34 PM

Gold is set for the biggest weekly decline since March as Greece struggles to form a government, boosting concern that Europe’s debt crisis will worsen and weakening the euro. Silver had its worst losing run in a year.

Gold for immediate delivery fell as much as 0.6 percent to $1,584.35 an ounce and was at $1,587.45 at 10:21 a.m. in Singapore. The metal is set to drop 3.3 percent this week, the most since the five days ended March 2. June-delivery bullion lost 0.5 percent to $1,587.70 an ounce in New York.

Prices slid to a four-month low of $1,580.13 on May 9 as political turmoil in Greece bolstered the appeal of the dollar as a haven. Greece’s political leaders go into a fifth day of talks today to form a government with Evangelos Venizelos, the socialist Pasok leader, set to press counterparts on a proposal for a unity government that would avert a new election.

“This week has been mostly dictated by some of the concerns out of Europe, in particular that Greece won’t able to form a coalition government,” said Natalie Robertson, an analyst at Australia & New Zealand Banking Group Ltd. “There’s been a bit of safe haven inflow into the U.S. dollar and that’s pressuring gold.”

The dollar advanced against most of its counterparts, including the euro which dropped to a three-month low. Adding to concern was the announcement by JPMorgan Chase & Co. that the firm lost about $2 billion on synthetic credit securities after an “egregious’” failure in its chief investment office, which the bank says focuses on hedging.

JPMorgan Chase

“This portfolio has proven to be riskier, more volatile and less effective as an economic hedge than the firm previously believed,” the New York-based company said in a quarterly securities filing.

Traders are the least bullish in five weeks after the metal erased almost all of this year’s gains. Fourteen of 32 analysts surveyed by Bloomberg expect prices to gain next week and six were neutral, the lowest proportion since April 6.

Holdings in bullion-backed exchange-traded products were at 2,382.707 metric tons yesterday, data tracked by Bloomberg show.

Spot silver dropped as much 0.8 percent $28.8275 an ounce and traded at $28.8625. Prices are set to slump 5 percent this week, the biggest decline since March 16. The metal is set to fall for a fifth day, the worst losing run since the period ended May 5, 2011.

Spot palladium was little changed at $614 an ounce, and platinum dropped as much as 0.6 percent to $1,479.13 an ounce, its lowest price since Jan. 16.

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Friday, 11 May 2012 03:34 PM
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