Gold futures fell the most in a week as commodities and equities slumped

Gold futures fell the most in a week as commodities and equities slumped after Fitch Rating said U.S. banks face a “serious risk” fromEurope’s debt woes.

The MSCI World Index of equities slumped for a fourth day, and the Standard & Poor’s GSCI index of 24 raw materials fell the most in three weeks. Fitch said yesterday that “the broad credit outlook for the U.S. banking industry could worsen,” unless Europe’s woes are resolved soon. Before today, gold rose 25 percent this year on demand for a store of value.

The lingering debt crisis means “investors move out of risky assets, they move out of equities, they move into short- dated bonds and into cash, and they even move out of gold because they tend to take profit in it to shore up losses in the rest of their portfolio,” said Marcus Grubb, the managing director of investment research at the World Gold Council,

Gold futures for December delivery fell 1.7 percent to $1,744.80 an ounce at 10:32 a.m. on the Comex in New York. A close at that price would mark the biggest drop for a most- active contract since Nov. 10.

Grubb spoke today on Bloomberg television’s “Countdown” with Owen Thomas from London.

Average physical gold purchases in the past two weeks in India, the world’s biggest consumer, has been the lowest since mid-June 2010, UBS AG said a report.

The dollar was little changed against a basket of major currencies after a three-day rally.

In the gold market, “we have seen some selling in the past few sessions because of the dollar’s strength and debt crisis in Europe,” David Meger, the director of metal trading at Vision Financial Markets in Chicago, said in a telephone interview. “However, it’s a matter of time before the safe-haven story is back” for the precious metal, he said.

Silver futures for December delivery fell 3.2 percent to $32.74 an ounce, heading for the biggest drop since Nov. 1. – Bloomberg

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Posted by admin on Nov 17 2011. Filed under Gold price. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry