Pacific Gold Corp fka PCFG

[jellogan]

Gold Drops as Improved U.S. Economic Outlook Curbs Haven-Investment Demand
By Tony C. Dreibus and Jason Scott - Jan 20, 2011 7:07 AM CT

Gold dropped for the first day this week in New York on signs of economic recovery in the U.S., cutting the need for haven investments.

Industrial production in the U.S. rose 0.8 percent in December, more than forecast, on gains in business equipment and home electronics. Sales of existing homes in the U.S. probably rose 4.1 percent last month, according to a Bloomberg survey. Gold assets held by exchange-traded products declined in six of the past seven sessions.

“Market sentiment for gold has shifted since the end of 2010, as evidenced by net outflows in ETFs,” said Anne-Laure Tremblay, an analyst at BNP Paribas in London. “This shift accompanies lower uncertainty in the economic outlook following decent U.S. industrial data.”

The February-delivery contract fell $6.90, or 0.5 percent, to $1,363.30 an ounce at 12:33 p.m. London time on the Comex in New York. Bullion for immediate delivery lost $6.20, or 0.5 percent, to $1,363.72 an ounce.

Bullion fell to $1,364.50 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from yesterday’s afternoon fixing of $1,372.

Gold futures rose 30 percent last year, a 10th annual advance, as the U.S. central bank kept its benchmark interest rate at a record low to spur a recovery. The futures reached an all-time high of $1,432.50 an ounce on Dec. 7.

Gold assets in ETPs fell 9.84 metric tons to 2,067.57 tons yesterday, according to data compiled by Bloomberg from 10 providers. Holdings reached a record 2,114.6 tons on Dec. 20.

‘Flip-Flopping Dollar’

“For the moment it looks as if gold is being weighed upon by broad pressure across the commodities in addition to some liquidation from ETF investors as treasury yields edge higher,” said James Moore, an analyst at TheBullionDesk.com in London, referring to exchange-traded funds.

Australia and New Zealand Banking Group Ltd. cut its 2011 price estimates for gold and platinum. It expects gold to average $1,453 an ounce this year, down 3.3 percent from an earlier call, and platinum to average $1,886 an ounce, 3.2 percent lower than a previous forecast, analysts Mark Pervan and Natalie Robertson wrote in a report today.

“Safe-haven demand has eased with improving European economic sentiment,” Pervan and Robertson wrote. “The currency market is less of a support, with a flip-flopping U.S. dollar likely to prevail over 2011.”

Platinum for April delivery fell $20.30 an ounce, or 1.1 percent, to $1,817.80 an ounce on the New York Mercantile Exchange. The price gained 21 percent last year, underperforming gold, silver and palladium. Palladium futures for March delivery fell 1.1 percent to $811 an ounce.

Chinese ‘Appetite’

ANZ raised its 2011 forecast for silver to $29.70 an ounce, up 16.3 percent from a previous estimate, on “rising industrial demand, particularly in emerging solar power, and increasing investment appetite by retail Chinese and Indian investors looking for cheaper entry into the precious metals market,” Pervan and Robertson wrote in the report.

Silver futures for March delivery fell for a second day, declining 1.2 percent to $28.455 an ounce on the Comex. The metal has retreated 8 percent this month.

To contact the reporters on this story: Tony Dreibus in London at [e-mail]; Jason Scott in Perth at [e-mail]

To contact the editor responsible for this story: Claudia Carpenter at [e-mail]

http://www.bloomberg.com/news/2011-01-20/gold-may-decline-as-investors-sell-asian-equities-on-data-buoying-dollar.html