Gold ends lower as safe-haven bid erodes

 

　　

　　Gold bars are displayed at Habib Jewels' boutique in Kuala Lumpur in this September 17, 2009 file photo.

 

　　NEW YORK/LONDON (Reuters) - Gold ended down for the fifth straight day on Friday, suffering its worst weekly performance in almost 15 months, as improved demand for "riskier" assets dampened its safe-haven demand bid.

　　Platinum and palladium recovered sharply from losses that took them to 3-1/2 month lows, but still ran their biggest weekly percentage loss since late 2008, amid hefty fund liquidation.

　　Spot gold was bid at $1,177.35 an ounce at 1842 GMT, against $1,181.10 late in New York on Thursday. U.S. gold futures for June delivery on the COMEX division of the New York Mercantile Exchange shed $12.50 to settle at $1,176.10 an ounce, after dealing in $1,166 to $1,188 session range.

　　"It's no longer just a safe-haven," said George Gero, Vice President with RBC Capital Markets Global Futures in New York.

　　"You have got two different tug-of-war plays here ... you've got a trillion dollar bailout on two continents that eventually could be inflationary, and then in the short-run, you have the tighten-your-belt lack of demand pulling it down."

　　Platinum was at $1,500.50 an ounce against $1,509, after earlier falling around 15 percent from last Friday's level. Palladium was at $433.75 versus $412.75, after falling to $393, down 25 percent on the week.

　　"Risk aversion and fears of contagion have weighed on the PGMs alongside the rest of commodities complex," analyst Suki Cooper at Barclays said, but added that from a fundamental point of view there has been positive news flow.

　　"Johnson Matthey painted a picture where we had platinum closer to balance in 2010 compared to 2009 and they did highlight they expect a surplus in palladium smaller than last year as well," she said.

　　In its closely watched Platinum 2010 report, platinum refiner and specialist Johnson Matthey Plc (JMAT.L) said it expects demand to strengthen as global auto production recovers this year and again in 2011.

　　Gold prices recovered from an earlier low of $1,166.50 an ounce, down more than 5 percent from last Friday. Traders say prices are due a period of consolidation after rising 6 percent in the first two weeks of May to record highs at $1,248.95 an ounce.

　　"We traded up from $1,125 to the high at $1,248 not even in a month, so it is quite normal that you have a movement against that," said Commerzbank trader Michael Kempinski.

　　"There is really too much investor money in there, and the funds are not all interested in the long term performance."

　　SOVEREIGN DEBT FEARS EBB

　　Fear has been a driving force in the market due to the euro zone's handling of its sovereign debt problems, but that premium seemed to erode in recent sessions as investors shifted back into risk.

　　"You saw gold performing a lot better over the past couple days then you did PGMs and silver," said one precious metals dealer.

　　"What you have now is people, who were going to gold as a safe-haven, are kind of getting out of it and getting back into everything else," he said, pointing to strong gains in platinum, palladium and copper.

　　The euro clung to gains against the dollar as fears of currency intervention rose, but oil prices remained depressed, falling below $70 a barrel.

　　Investment demand for physical gold continued to be firm. Holdings of the world's largest gold-backed exchange-traded fund, New York's SPDR Gold Trust, hit a record 1,220.152 tonnes on Thursday.

　　Silver was bid at $17.57 an ounce against $17.59.