US MIDDAY: gold slips below $1,400

May 16, 2013

Gold Falls
Gold Falls

Gold slid below $1,400 an ounce on Wednesday, losing two percent and hitting its lowest in nearly a month as a record rally in US equities and economic optimism undermined bullion’s safe-haven appeal. The metal fell for a fifth straight session for its longest daily losing streak since January 2011 as the S&P 500 hit a new all-time high and Wall Street has risen for four consecutive sessions.

“There is no reason to own gold as long as people keep on putting money into the stock market. You can see it everywhere that the economy is turning around,” said Comex gold options floor trader Jonathan Jossen. A pause in strong physical demand after news India restricted imports to cut trading deficit also weighed on gold.

Spot gold dropped as much as 2.5 percent to $1,390.24, its lowest since April 19. It was down 2 percent at $1,396.94 an ounce by 2:09 pm EDT (1809 GMT). Analysts expect the fall below the psychologically significant $1,400 level could be a trigger for further heavy selling and might retest two-year lows of $1,321.35 an ounce hit on April 16.

US Comex gold futures for June delivery settled down $28.30 at $1,396.20 an ounce, with trading volume on track to finish near its 30-day average, preliminary Reuters data showed. A stronger dollar and initial heavy losses in crude oil also weighed on gold.

As a gauge of investor sentiment, holdings at SPDR Gold Trust, the largest gold-backed ETF, were unchanged at 33.8 million ounces on Tuesday, but still within sight of their lowest since March 2009 hit earlier. Gold buying in India came to a halt as the country’s central bank restricted imports after a surge in buying in April sent the trade deficit to $17.8 billion for the month, up more than 72 percent from March.

“With India doing its best through taxation to limit gold buying, the demand from there is not as big as it was the last time we were at these levels,” Marex Spectron head of precious metals David Govett said. In other precious metals, silver fell 2.7 percent to $22.72 an ounce, platinum was down 0.5 percent to $1,489.24 an ounce and palladium dropped 0.1 percent to $725.72 an ounce. Reuters

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