Tags: gold | metals | platinum | bullion

Gold Drops on Stock Gains, Portuguese Plan to Rescue Ailing Bank

Monday, 04 Aug 2014 02:42 PM

Gold fell on Monday as a bailout agreement to rescue Portugal's largest listed bank and a better tone to the global economy reflected by a higher S&P 500 equities index lessened safe-haven buying in the yellow metal.

Bullion has now dropped in five out of the last six sessions after a string of encouraging U.S. economic data including strong second-quarter economic growth last week prompted selling.

"Good economic data over the next few months are likely to put the subject of interest rate hikes back on the Fed's agenda, which should reduce the relative attractiveness of gold and silver and preclude any sharp rises in price," said Eugen Weinberg, head of commodities research at Commerzbank.

Spot gold was down 0.4 percent at $1,288.26 an ounce by 2:10 p.m. New York time.

A run of forecast-beating data, including strong U.S. wage growth, had fueled talk that the Fed could raise interest rates sooner than expected, increasing the opportunity cost of holding gold, which does not reward its investors with interest or dividends like other assets.

The yellow metal, however, rebounded 1 percent on Friday after worse-than-expected U.S. non-farm payrolls data dampened speculation the Fed will raise interest rates soon.

On Monday, the S&P 500 index rose as investors welcomed news that Portugal prevented the collapse of one of its major banks.

In the physical markets, buying remained subdued in the seasonally quiet summer period, even as many consumers expected prices to decline further, dealers said.

In top buyer China, local premiums to the global benchmark were steady near $3 an ounce, compared to over $20 earlier this year. Premiums in other parts of Asia have also largely remained steady over the past several weeks.

Silver slipped 0.4 percent to $20.19 an ounce, while platinum was up 0.3 percent at $1,458.75 an ounce and palladium fell 1.1 percent to $852.22 an ounce.

Platinum group metal prices should be underpinned on news new car sales in Germany, Europe's largest auto market, bounced back in July, suggesting further improvement in second-half demand.

© 2017 Thomson/Reuters. All rights reserved.

   
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Gold fell on Monday as a bailout agreement to rescue Portugal's largest listed bank and a better tone to the global economy reflected by a higher S&P 500 lessened safe-haven buying in the yellow metal.
gold, metals, platinum, bullion
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2014-42-04
Monday, 04 Aug 2014 02:42 PM
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