Gold Trades Below 12-Week High; Growth Weighed With U.S. Rates

By Laura Clarke and Glenys Sim

Gold fell from the highest in almost 12 weeks as commodities slumped and investors weighed the prospects for higher U.S. interest rates against the outlook for the global economy. Silver and palladium also slid.
Commodities from oil to corn tumbled, led by copper’s biggest plunge in almost six years, after the World Bank cut its global growth outlook, citing weak expansion in Europe and reduced growth prospects in China, the biggest consumer of raw materials and the top gold buyer.
“The big drop in copper triggered some selling in precious metals as well,” said Wallace Ng, a Shanghai-based trader at Gemsha Metals Co. Still, “gold is holding up quite well because of some haven and seasonal demand,” he said.
Gold for February delivery fell 0.3 percent to $1,230.20 an ounce on the Comex in New York by 10:49 a.m. London time. The metal climbed to $1,244.50 yesterday, the highest since Oct. 23, before paring gains. Gold for immediate delivery was little changed at
$1,229.15 in London, according to Bloomberg generic pricing.
Holdings in exchange-traded products backed by bullion slid 3.2 metric tons to 1,595.9 tons yesterday, the biggest drop in a week, to the lowest since April 2009.
Gold in euros held below the highest level since September 2013 after Greek Finance Minister Gikas Hardouvelis said the nation could exit the currency bloc as the opposition party holds a slim lead heading into the Jan. 25 elections.

Greece Concerns

The euro traded near a nine-year low against the dollar amid speculation the European Central Bank will begin buying bonds as early as next week to stave off deflation, just as the Federal Reserve is considering the timing of its first rate rise since 2006.
“Rising economic risk in Europe, partly driven by political uncertainty in Greece, is boosting haven demand,” Huang Wei, an analyst at Huatai Great Wall Futures Co., wrote in a note. The divergence in monetary policies between the U.S. and Europe will drive the dollar higher, and it will be difficult for precious metals to sustain rallies, he said.
Silver for immediate delivery lost as much as 2.9 percent, the most since Dec. 31, to $16.5513 an ounce before trading at $16.6863. Platinum lost 0.6 percent to $1,233.13 an ounce and palladium dropped as much as 3.6 percent, the most since Nov. 5, to $785.80 an ounce.