|ORO Y PLATA INTERNACIONAL S.A.
Comex Gold Slips As Safe-Haven
Gold futures snapped their three-day winning streak Thursday when some
of the recent safe-haven buying dissipated as equities rallied sharply.
Catalysts included indications from China that it is not planning to exit
European assets and Spain's passage of additional budget cuts. Still,
analysts said gold's longer-term uptrend remains in place since European
debt worries persist.
Gold for June delivery on the Comex division of the New York Mercantile
Exchange fell $1.50, or 0.1%, to $1,211.90 an ounce. The August contract,
which now has the most open positions, slipped 90 cents, or 0.1%, to
"We've seen stock prices pick up sharply, so gold prices may be capped
to the upside for the moment," said Carlos Sanchez, associate director of
research with CPM Group in New York.
As the gold pit was closing, the Dow Jones Industrial Average gained
around 200 points. Analysts linked this, plus strength in the euro, to a
posting on the Web site of China's State Administration of Foreign
Exchange saying Europe will remain "one of the major markets for
investing China's exchange reserves." Authorities said a news report,
saying that China is reviewing its holdings of euro assets, is "groundless."
Meanwhile, Spain's government narrowly passed EUR15 billion ($18.29
billion) of additional budget cuts for this year and the next.
Gold, which hit a record high mid-month on worries about European debt
but then pulled back, climbed again on each of the first three days of the
week on concerns that sovereign-debt issues in Europe could pose a risk
to banks on the continent.
"You had a situation where everybody got worried about Europe, and the
market tended to price in a worst-case scenario," said Michael Gross,
broker and futures analyst with OptionSellers.com in Tampa.
"Now there is more talk of what they can do to get the debt under control,"
Gross said. Thus, equities and most commodities rose.
"That is taking some of the fear premium out of gold, so you're seeing a
little weakness creeping into gold now," Gross said. "That buying is going
into other higher-risk assets."
Still, gold didn't fall much.
"Gold is probably going to be supported for some time because the
European debt crisis isn't going to just disappear overnight," Gross said.
"The longer-term trend in gold remains intact. You still have longer-term
buying going on."
On pullbacks back toward $1,200, gold is likely to find support from
investors and jewelry fabricators using a pullback as a buying opportunity,
Sanchez said. This occurred last week when June gold briefly dipped
Meanwhile, Korean tensions following the sinking of a South Korean
patrol ship in March also remain a supportive influence for gold, which is
bought as a hedge against both economic and geo-political uncertainty.
Seoul has accused the North of firing a torpedo at the ship, killing 46
sailors. North Korea reacted to a South Korean anti-submarine military
exercise Thursday by saying it would meet "confrontation with
Other precious metals, all of which have heavier industrial uses than gold,
climbed to their highest level in a week as rising equities were viewed as a
sign of improving economic fortunes and thus manufacturing demand.
Silver for July delivery rose 16.2 cents, or 0.9%, to $18.468 an ounce. July
platinum settled up $22.60 or 1.5%, to $1,552.90. September palladium rose
$16.55, or 3.7%, to $465.05.
"The overall pessimism has eased," Sanchez said. A recovering economy
would boost electronics demand for silver, Sanchez said. Platinum and
palladium are used for catalytic converters in autos.