Gold Drops on U.S. Economy; Platinum Falls on South Africa Talks

Apr 17, 2014 3:12 pm ET

April 17 (Bloomberg) -- Gold futures fell as signs of gains in the U.S. economy eroded demand for the metal. Platinum dropped amid signs of progress in the labor dispute in South Africa, the world’s biggest producer.

Consumer confidence rose from a nine-week low as Americans grew more upbeat about the economy, and jobless claims were close to the lowest in almost seven years, data showed today. The Federal Reserve Bank of Philadelphia factory index, a gauge of regional manufacturing, climbed to 16.6 in April, topping estimates by analysts. Gold dropped 1.9% this week.

“These positive economic reports are pushing gold lower,” Fain Shaffer, the president of Infinity Trading Corp. in Indianapolis, said in a telephone interview. “There’s not really a compelling story to buy gold now, other than the situation in Crimea.”

Gold futures for June delivery fell 0.7 percent to close at $1,293.90 an ounce at 1:40 p.m. on the Comex in New York. Trading was 28 percent below the average in the past 100 days, according to data compiled by Bloomberg. The market will be closed tomorrow for Good Friday.

This year, gold has climbed 7.6 percent this year on haven demand linked to the turmoil in Ukraine. Diplomats from the Eastern European country, Russia, the U.S. and the European Union met for talks on the crisis in Geneva today.

‘Under Pressure’

“As the U.S. economy continues to recover, gold will remain under pressure,” said Wang Xiaoli, chief investment strategist at CITICS Futures Co. in Shenzhen, a unit of China’s biggest listed brokerage. “The situation in Ukraine just means there will be buyers when prices dip below $1,300.”

In 2013, gold plunged 28 percent, the most since 1981, as U.S. equities rallied to a record and inflation remained muted. The slump ended a 12-year rally, the longest ever.

Yesterday, holdings in the SPDR Gold Trust, the largest exchange traded product backed by the metal, fell the most in four months to 798.43 metric tons, the lowest since Feb. 21.

Platinum futures for July delivery dropped 0.6 percent to close at $1,428.70 an ounce on the New York Mercantile Exchange. The price for immediate delivery fell as much as 1.5 percent at 2:12 p.m.

Anglo American Platinum Ltd., Lonmin Plc and Impala Platinum Holdings Ltd., South Africa’s top producers, offered to more than double the wages of their lowest-paid workers within three years as a strike that has crippled operations entered the 13th week.

Palladium futures for June delivery climbed 0.6 percent to $807.10 an ounce on the Nymex.

Silver futures for May delivery fell 0.2 percent to $19.596 an ounce on the Comex.

--With assistance from Glenys Sim in Singapore and Maria Kolesnikova in London.