Gold Drops for Third Straight Day as Equities Rebound Trims Haven Demand

Gold declined for a third day, set for the worst losing run in seven weeks, as concern eased that the global economy is stalling, boosting global equities and cutting demand for haven investments.
Immediate-delivery bullion shed as much as 1.1 percent to $1,728.40 an ounce, and traded at $1,739.42 at 9:20 a.m. in Singapore. Gold, which reached a record $1,814.95 on Aug. 11, is still 22 percent higher this year on debt woes in Europe and the U.S. The metal in Swiss francs climbed to an all-time high today.
The MSCI Asia Pacific Index rose for the first day in three after Japan’s economy contracted less than estimated in the second quarter, adding to signs of a rebound from a record earthquake and tsunami in March. U.S. retail sales climbed the most in four months in July, while applications for jobless benefits were the lowest since April, reports showed last week.
“Gold prices remained under pressure as investors continued to shift back into equities at a measured pace,” James Steel, an analyst at HSBC Securities USA Inc., wrote in a note to clients.
December-delivery gold also dropped for a third day, losing as much as 0.7 percent to $1,730.80 on the Comex in New York, as higher margins on contracts encouraged sales. CME Group Inc. (CME), the largest futures market, hiked initial- and maintenance margins, or the minimum amount of cash that investors must keep on deposit, by 22 percent from the close of trade on Aug. 11.

Hedge Funds

Exchange-traded product holdings decreased for a second day on Aug. 12 to 2,182.083 metric tons, after reaching a record 2,216.756 tons on Aug. 8, Bloomberg data show. Hedge funds and other money managers trimmed their net-long gold positions by 18 percent to 203,573 contracts in the week to Aug. 9, data from the U.S. Commodity Futures Trading Commission showed.
In Europe, the Stoxx Europe 600 Index trimmed its third weekly drop last week after France, Spain, Italy and Belgium imposed bans on short selling to stabilize markets amid speculation the region’s debt crisis may spread to France. In Swiss francs, gold reached a record 1,371.79 francs today.
Cash platinum climbed for a fifth five day, gaining as much as 0.2 percent to $1,800.50 an ounce. Spot silver declined as much as 1.1 percent to $38.6875 an ounce, while palladium was little changed at $746 an ounce.

Sources : http://www.bloomberg.com/news/2011-08-15/gold-declines-for-third-straight-day-as-equity-rebound-trims-haven-demand.html