Gold Futures Decline as Open Interest Slumps to Five-Year Low

Aug 11, 2014 2:38 pm ET

Aug. 11 (Bloomberg) -- Gold prices declined as investors sent holdings in futures and options to the lowest in almost five years amid easing tensions in Ukraine.

Open interest in the Comex market slid 2.1 percent in the week ended Aug. 5 to 563,036 contracts, U.S. government data showed Aug. 8. That’s the lowest since September 2009. Russia ended military drills in the Astrakhan region, sending troops back to their permanent bases, Interfax reported last week.

Gold has rallied 9 percent this year, defying bearish forecasts from Goldman Sachs Group Inc., as violence in Eastern Europe and the Middle East increased the appeal of the metal as a hedge against declines in other assets. In 2013, signs of U.S. economic expansion sent the commodity down 28 percent as stocks rose to a record. The MSCI All-Country World Index climbed as much as 1 percent today.

“Lack of any news out of Ukraine is pushing the safe-haven premium of gold lower,” Adam Klopfenstein, a senior market strategist at Archer Financial Services in Chicago, said in a telephone interview. “The strength in the equity market is pulling money away from gold.”

Gold futures for December delivery fell less than 0.1 percent to settle at $1,310.50 an ounce at 1:38 p.m. on the Comex in New York. Trading was 52 percent below the average for the past 100 days, data compiled by Bloomberg show.

Last week, holdings in exchange-traded products backed by gold fell 7.4 metric tons, the most since June, data compiled by Bloomberg show. Money managers cut their net-long position by 15 percent in the week through Aug. 5, according to the U.S. Commodity Futures Trading Commission.

Silver futures for September delivery gained 0.8 percent to $20.095 an ounce on the Comex.

On the New York Mercantile Exchange, palladium futures for September delivery rose 1.7 percent to $874.70 an ounce, the biggest gain since June 19. Trading was 43 percent above the 100-day average, Bloomberg data showed. The metal has jumped 22 percent this year.

Platinum futures for October delivery fell 0.5 percent to $1,471.60 an ounce.

--With assistance from Nicholas Larkin in London.