NEW YORK/LONDON: Gold fell on Thursday, breaking ranks with the euro and equities as tame US inflation data prompted bullion investors to take profits after a three-day rally pushed prices to their highest levels since mid-December.
Bullion was one of the few losers in the broadly higher metals and commodities complex after US data showed the consumer price index was unchanged in December and core CPI inched up only 0.1 percent.
Even though gold is up nearly 6 percent year to date, traders were cautious with the euro in negative territory so far this year and fears growing that equities may be poised to retreat.
"We believe the gold rally may begin to stall temporarily, but not reverse," said James Steel, chief commodity analyst at HSBC.
"Without a higher euro, we do not see a compelling near-term reason for higher gold prices," Steel said, adding that he remained bullish on gold in the medium-to-long term.
Spot gold was down 0.4 percent at $1,652.19 an ounce by 12:14 p.m. (1714 GMT), having earlier peaked at $1,669.75, its highest since Dec. 13.
US gold futures for February delivery were down $6.40 at $1,653.50 an ounce.
Gold moved in tandem with the euro over the last two months of 2011, but the correlation between the two has become more erratic with the European debt crisis showing no signs of abating.
The euro advanced to a two-week high against the US dollar on Thursday after a solid Spanish debt auction, but analysts believed the euro's gains were temporary.
"The euro rally could be running out of steam ahead of $1.30," said Saxo Bank senior manager Ole Hansen.
Hansen said that gold's rally does not appear overdone but it must confirm support on charts before embarking on another leg up.
SILVER ETF, KODAK IN FOCUS
Silver eased 0.1 percent to $30.45 an ounce.
The metal largely ignored news that Sprott Physical Silver Trust's holdings surged 41 percent after the ETF raised over $300 million to acquire physical silver to back its shares, which can be redeemed in exchange for the physical metal.
One-time giant silver user and photography icon Eastman Kodak Co filed for bankruptcy protection and plans to shrink significantly after a prolonged plunge for one of America's best-known companies.
Silver's ratio to gold -- the number of silver ounces needed to buy an ounce of gold -- dipped to 54, down from a one-year high of around 58 hit in late December, which demonstrated silver was outperforming the yellow metal.
Bullion dealer ScotiaMocatta said in a note that a close below 54 will prompt investors to sell gold and buy silver and drive the ratio to the 50 area.
Spot platinum was up 0.5 percent at $1,524.99 an ounce, while spot palladium was up 1.7 percent at $675.22 an ounce.
Comments
Comments are closed for this article.