Gold futures posted the biggest decline in almost seven months as Portuguese banking concerns eased and equities gained, diminishing demand for haven assets.
Portuguese 10-year government bonds were set for the biggest two-day advance in a month on speculation that Portugal would contain financial woes at one of its banking groups. The Standard & Poor’s 500 Index added as much as 0.6 percent after Citigroup Inc. reported profit that topped analysts’ estimates.
The drop comes after gold capped the longest run of weekly gains since 2011, partly as missed payments on notes by a parent company of Portugal’s second-biggest bank renewed concern that Europe hasn’t resolved its debt crisis. EU spokesman Simon O’Connor said July 11 that the country has taken steps to shore up its financial system. Goldman Sachs Group Inc.’s Jeffrey Currie reiterated his outlook for lower bullion prices as confidence increases in the economic recovery and inflation remains tame.
“A strong stock market and some stability in the EU” are pressuring gold, Peter Thomas, a senior vice president at Zaner Group LLC in Chicago, said in a telephone interview. “A lot of people were looking at Portugal as a domino effect, and as we saw, O’Connor prevailed and it didn’t have a significant impact.”
Gold futures for August delivery fell 2.3 percent to settle at $1,306.70 an ounce at 1:50 p.m. on the Comex in New York, the biggest loss for a most-active contract since Dec. 19.
Trading was 66 percent above the average for the past 100 days for this time of day, data compiled by Bloomberg show.
Price Outlook
Goldman’s Currie reiterated his outlook for prices to drop to $1,050 an ounce by year-end, even as hedge funds add to their bullish holdings for a fifth straight week and assets in exchange-traded products advance.
For the rest of this article, click here: http://www.bloomberg.com/news/2014-07-14/gold-near-4-month-high-as-investors-assess-geopolitical-tensions.html