Gold Slips on Cyprus Deal

March 25, 2013 at 13:52

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Gold declined below $1,600 an ounce in New York, following a three-week rally, as equities climbed after Cyprus agreed with euro-area finance ministers on a rescue package.

Gold advanced 1 percent last week as Cyprus struggled to secure a support from international creditors. The nation won a 10 billion-euro ($13 billion) bailout after agreeing late yesterday to shrink its banking system, instead of a previous demand to impose a levy on all bank accounts. Global equities reached a one-week high today.

“Firmness in equity markets has reduced its appeal as an alternative asset,” Mumbai-based Kotak Commodity Services Ltd. said today in a report, referring to gold. “The Cyprus issue did give a boost to the gold price. However, there is a lack of factors for a sharp and sustained rally.”

Futures trading volume was 49 percent above the average in the past 100 days for this time of day. Gold for immediate delivery declined 0.6 percent to $1,599.50 in London.

The Cyprus accord with the “troika” of the European Central Bank, the European Commission and the International Monetary Fund was ratified by finance ministers from the 17- member euro area. The agreement would make Cyprus the fifth country to tap a rescue since the euro crisis began in 2009.

Gold rallied the past 12 years in the best run in at least nine decades as nations pledged more action to bolster economic growth. Prices are down 4.5 percent this year and investors sold bullion held through exchange-traded products amid signs the U.S. economy is improving and as Federal Reserve policy makers debated the pace of stimulus.

Silver for May delivery was little changed at $28.69 an ounce in New York. Palladium for June delivery was 0.4 percent lower at $758.80 an ounce. Platinum for July delivery lost 0.1 percent to $1,583.50 an ounce.