Gold pares gain on speculation demand may slow after price rally

Demand in China threatens to slow in second half of year.

Gold pared gains in New York amid concern that demand might slow from investors and physical buyers after prices rallied to a two-week high.

Gold demand in China, the world’s biggest consumer after India, may slow in the second half of this year after surging in April when the precious metal tumbled into a bear market, the China Gold Association said. Earlier today, bullion reached the highest level since May 15, extending yesterday’s 1.5% gain, before declining. Record premiums for cash gold in Singapore probably will drop in June, GoldSilver Central, a bullion dealer in the country, said today.

“We could see gold lower in the short term,” said Afshin Nabavi, a senior vice president at bullion refiner MKS (Switzerland) SA in Geneva. “With the rally we saw yesterday, the physical guys have slowed a bit.”

Gold for August delivery was little changed at $1,412.60 an ounce by 7:29 a.m. local time on the Comex in New York, after earlier climbing as high as $1,421.60 an ounce. Prices are up 1.8% this week, while still heading toward a second straight monthly loss. In London, gold for immediate delivery fell less than 0.1% to $1,413.05 an ounce.

Gold has dropped 16% this year as equities rallied and the dollar strengthened amid concern that the U.S. Federal Reserve may slow the pace of stimulus. Data yesterday showed that the U.S. economy grew at an annualized 2.4% pace in the first quarter, down from a preliminary reading of 2.5%, while jobless claims increased.

ETPs

Gold assets in exchange traded products tracked by Bloomberg fell to 2,152 metric tons yesterday, the lowest since June 2011. Holdings in the SPDR Gold Trust, the largest ETP backed by the precious metal, held level after climbing yesterday for the first time since May 9.

Palladium futures for September delivery dropped 1.5% to $749 an ounce in New York. The metal has advanced 7.3% in May, set for the best month since November. In London, palladium declined 1.5% to $746.91 an ounce.

Silver futures for July delivery in New York dropped 0.7% to $22.54 an ounce. Prices are down 8.8% in May, heading for a fourth straight monthly decline. Silver for immediate delivery in London fell 0.8% to $22.605 an ounce, set for a second weekly gain.

Platinum futures for July delivery declined 0.8% to $1,470.40 an ounce. Spot prices fell 0.9% to $1,470.65 an ounce, heading for a fourth monthly loss.

 

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