Gold heads for worst quarter since 1968 as demand ebbs

Dollar strengthens

Gold fell for a third day, heading for the biggest quarterly loss in more than 40 years, as U.S. economic data beat estimates, backing the case for reduced stimulus from the Federal Reserve as the dollar strengthened.

Cash bullion declined as much as 0.3 percent to $1,273.76 an ounce, and traded at $1,275.46 at 8:43 a.m. in Singapore. The metal dropped to $1,269.46 on June 21, the cheapest since September 2010. It’s lost 20.2 percent since the start of April, the biggest drop in quarterly data compiled by Bloomberg since 1968, when bullion traded at about $40.

U.S. durable goods orders rose more than forecast in May, while consumer confidence for June exceeded projections, data showed. Fed Chairman Ben S. Bernanke said this month the central bank, which buys $85 billion of Treasury and mortgage debt a month, may trim purchases this year and end the program in 2014 should the economy continue to improve. This year, investors have sold goldfrom exchange-traded products at a record pace.

“Gold declined as the better-than-expected U.S. economic data added to speculation that the Federal Reserve will end the stimulus program,” Lachlan Shaw, an analyst at Commonwealth Bank of Australia, wrote in an e-mail.

Gold has fallen 24 percent in 2013, dropping into a bear market in April, as the Bloomberg U.S. Dollar Index climbed 5.1 percent. The gauge, representing ten major currencies weighted by liquidity and trade flows, gained as much as 0.2 percent.

Goldman Forecasts

Gold for August delivery traded at $1,274.60 an ounce on the Comex, from $1,275.10 yesterday. Goldman Sachs Group Inc. expects the metal to end this year at $1,300, paring a previous estimate of $1,435, according to a June 23 report.

Assets in the SPDR Gold Trust, the largest bullion-backed ETP, fell to 969.5 metric tons yesterday, and are 28 percent lower this year. Total ETP holdings are heading for a sixth monthly contraction.

Cash silver was little changed at $19.6475 an ounce, 31 percent lower this quarter. Silver is the worst performer this year on the Standard & Poor GSCI Spot Index of raw materials.

Spot platinum was little changed at $1,350.05 an ounce, after tumbling to $1,326.55 yesterday, the lowest since November 2009. Palladium traded at $666.10 an ounce from $666 yesterday. Both metals are heading for quarterly declines.

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