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Gold Falls as Stock Market Rally Reduces Demand for Haven Asset

Monday, 29 Aug 2011 05:23 PM

Aug. 29 (Bloomberg) -- Gold fell in New York after equities rallied, eroding the appeal of the precious metal as a haven asset.

Federal Reserve Chairman Ben S. Bernanke said last week in Jackson Hole, Wyoming, that the central bank has tools to stimulate the economy, without providing details or signaling when or whether policy makers will embark on a third round of so-called quantitative easing. The Standard & Poor’s 500 Index rose 4.7 percent last week after dropping 16 percent in the previous four weeks. Gold fell 3 percent last week after surging to a record $1,917.90 an ounce on Aug. 23 in New York.

“With Bernanke sitting on the sideline, investors see more upside in equities,” Matt Zeman, a strategist at Kingsview Financial in Chicago, said in a telephone interview. “Gold is falling because people are chasing equities. The risk trade is back on.”

Gold futures for December delivery fell $6.50, or 0.4 percent, to $1,790.80 at 10:04 a.m. on the Comex in New York. Before today, prices surged 26 percent this year as escalating U.S. and European debt woes, sliding equity markets and declining prospects for global growth boosted the appeal of bullion as an alternative asset.

Silver futures for December delivery lost 31.6 cents, or 0.8 percent, to $40.685 an ounce on the Comex.

Platinum futures for October delivery dropped $3.90, or 0.2 percent, to $1,823 an ounce on the New York Mercantile Exchange. Palladium futures for December delivery slipped $2.10, or 0.3 percent, to $756 an ounce on the Nymex.

--Editors: Millie Munshi, Steve Stroth

To contact the reporters on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net;

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

© Copyright 2017 Bloomberg News. All rights reserved.

   
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Aug. 29 (Bloomberg) -- Gold fell in New York after equities rallied, eroding the appeal of the precious metal as a haven asset. Federal Reserve Chairman Ben S. Bernanke said last week in Jackson Hole, Wyoming, that the central bank has tools to stimulate the economy,...
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Monday, 29 Aug 2011 05:23 PM
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