Gold drops as record price, IMF growth reduction prompts investors' sales
Azerbaijan, Baku, April 12 / Trend /
Gold retreated as a rally to a record prompted some investors to sell and a tumble in energy prices, sparked by reduced economic growth forecasts from the International Monetary Fund, reduced inflationary pressures, Bloomberg reported.
Immediate-delivery bullion fell 0.4 percent to $1,456.78 an ounce at 3:16 p.m. in Singapore after touching an all-time high of $1,478.18 yesterday. Gold for June delivery in New York lost 0.7 percent to $1,457.70, retreating from a record $1,478.
Crude in New York dropped 2.5 percent yesterday from a 30- month high and extended that decline today, losing 1.9 percent to $107.87 per barrel. The IMF said in a global outlook the U.S. will expand 2.8 percent this year, slower than 2010, and the Japanese growth forecast was cut to 1.4 percent from 1.6 percent.
"The rally of gold prices has a shaky footing as there have still hardly been any inflows into exchange-traded funds and correction potential is building up," Eugen Weinberg, head of commodity research at Commerzbank AG, wrote in a note. "A broader correction of commodity prices seems to be needed."
"Sentiment in gold and silver markets will likely be bearish," said Ong Yi Ling, Singapore-based analyst with Phillip Futures Pte. "Investors may be eager to lock in profits after the recent rally, fearing the exit of large commodity players from the market."
Gold has come under pressure after Goldman Sachs Group Inc. ended a recommendation to buy a basket of commodities including crude oil, copper, cotton and platinum, Ong said. Goldman said the risks outweigh any further potential gain.