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Gold Stumbles
in New York as Growth May Curb Investment Demand

By Claudia Carpenter and Pham-Duy Nguyen

Dec. 30 (Bloomberg) -- Gold futures fell in New York on speculation that U.S. economic growth will curb demand for the precious metal as an alternative to the dollar.

Silver also dropped as the greenback gained as much as 0.5 percent against a basket of six major currencies after a report showed companies in the U.S. expanded this month more than economists anticipated. Before today, gold futures slid 11 percent from a record of $1,227.50 an ounce, set on Dec. 3.

“As long as the dollar continues to rally, gold doesn’t have a prayer,” said Leonard Kaplan, the president of Prospector Asset Management in Evanston, Illinois.

Gold futures for February delivery fell $9.60, or 0.9 percent, to $1,088.50 at 10:45 a.m. on the Comex division of the New York Mercantile Exchange.

In London, bullion for immediate delivery dropped $8.41, or 0.8 percent, to $1,088.43 an ounce. Before today, the spot price also dropped 11 percent from a record of $1,226.56 on Dec. 3.

The 20-day moving average for spot gold at about $1,120 is “perilously close” to the 50-day moving average of almost $1,118, according to Rhona O’Connell, a managing director of research company GFMS Analytics Ltd. in London.

A drop in the 20-day average below the 50-day line “would not be good news at all” for investors betting on higher prices, O’Connell said. “Technicals look horrid.”

Before today, gold futures fell 7.1 percent this month, heading for the biggest monthly decline since October 2008.

A gauge of business activity from the Institute for Supply Management-Chicago Inc. rose to 60, the highest level since January 2006, from 56.1 in November, the group said today. Readings above 50 signal expansion. A drop to a median estimate of 55.1 was projected by 53 economists in a Bloomberg survey.

Gold rose 24 percent in 2009 before today as the Federal Reserve kept lending rates near zero percent to spur U.S. growth.

Also in New York, silver futures for March delivery fell 33 cents, or 1.9 percent, to $16.78 an ounce. April platinum slid $13, or 0.9 percent, to $1,463 an ounce. Palladium for March delivery rose $10.15, or 2.6 percent, to $399 an ounce.

http://www.reuters.com/article/idUSN3021974920091230