Gold falls after slow global demand
Gold declined after a report showed that global demand slowed in the third quarter, and as the dollar held near the highest level in two months, curbing interest in alternative investments. Platinum slumped the most in a week after a two-month strike in South Africa ended.
Global gold demand dropped 11 percent to 1,084.6 tons in the third quarter from a record a year earlier as slowing growth in China cut investment and jewelry purchases, the World Gold Council said in a report today. President Barack Obama is negotiating to reach a deficitreduction deal with Congress to avert $607 billion in automatic tax increases and spending cuts, the so-called fiscal cliff.
"Risk appetite is generally subdued," said Ole Hansen, the head of commodity strategy at Saxo Bank A/S in Copenhagen. "The dollar index, trading near a two-month high, is creating headwinds, while the ongoing fiscal cliff concerns support gold."
Gold for immediate delivery fell as much as 0.2 percent to $1,722.95 an ounce, and traded at $1,724.82 by 9:44 a.m. in London. Gold for December delivery lost 0.3 percent to $1,725 an ounce on the Comex.
"China's demand is steady, although compared to a year ago, it is definitely weaker," said Xiang Nan, an analyst at CITICS Futures Co., a unit of China's biggest listed brokerage. China's jewelry purchases slid 5.5 percent and bar and coin investment declined 12 percent, leaving total consumer demand at 176.8 tons, the WGC report showed.
The dollar was little changed against a sixcurrency basket including the euro and yen and is up 1.4 percent this month. Gold is still 10 percent higher this year as stimulus by central banks around the world boosted demand for bullion as a store of value.
Billionaire investors George Soros and Louis Moore Bacon increased their stakes in exchange-traded products backed by gold in the third quarter, filings showed yesterday. Total assets held in ETPs, which reached a record 2,596.106 metric tons on Nov. 8, were at 2,595.39 tons yesterday.
Platinum for immediate delivery fell 0.8 percent to $1,573.75 an ounce and palladium fell 0.1 percent $636.50 an ounce. Anglo American Platinum Ltd. (AMS), producer of about 40 percent of global output of the metal, said a two-month strike in South Africa ended after it agreed to increase pay.