Gold Set for Worst Run This Year as Commodities Slump on European Concerns By Glenys Sim - Mar 6, 2012

Gold may drop for a fourth day in the worst run this year as concern resurfaced that Europe’s debt crisis will slow growth, strengthening the dollar and eroding demand for alternative investments. Silver fell.

Spot gold was little changed at $1,673.77 an ounce at 9:30 a.m. Singapore time even as bullion assets held by exchange- traded products reached a record. The precious metal slumped to $1,663.30 yesterday, the lowest price since Jan. 25. The last time gold fell for four days was in the period to Dec. 15.

The Standard & Poor’s GSCI Spot Index of 24 commodities dropped 1.5 percent to close at 692.61 in New York yesterday, the biggest loss since Dec. 14, as equities tumbled. Gold has lost 2.6 percent in the past three days as the dollar advanced 1.3 percent against a six-currency basket including the euro.

“Risk sold off overnight as concerns re-emerged that Greece’s sovereign-debt restructure won’t be finalized by the deadline,” Lachlan Shaw, an analyst at Commonwealth Bank of Australia, wrote in a note today. “Gold fell as the U.S. dollar gained following the negative European news.”

The Greek government said it will use collective-action clauses to compel bondholders to accept its debt swap if it receives sufficient consent from investors. Europe’s economy shrank 0.3 percent last quarter, data yesterday showed, adding to signs the region’s debt crisis is hurting growth.

Bullion assets in ETPs expanded for a fifth day to 2,406.313 metric tons yesterday, data tracked by Bloomberg show. April-delivery gold traded little changed at $1,674.40 an ounce on the Comex in New York after dropping for three days.

Silver, this year’s best-performing metal, fell for a fourth day in the worst run since September, dropping 0.4 percent to $32.8275 an ounce. It slid to $32.48 an ounce yesterday, the lowest price since Jan. 25.

Spot platinum gained 0.4 percent to $1,621.75 an ounce, snapping three days of declines. Palladium climbed 0.8 percent to $673 an ounce, gaining for the first day in four.

To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
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