Gold Poised to Drop as Open Interest Reaches 5-Year Low

New York (Aug 11)  Gold prices were poised to decline as investors sent holdings to the lowest in almost five years amid easing tensions in Ukraine.

Open interest in New York futures and options 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 Sept. 2009. Russia ended military drills in the Astrakhan region, sending troops back to their permanent bases, Interfax reported last week.

Bullion rallied almost 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 prices 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 0.2 percent to $1,308.80 an ounce at 11:32 a.m. on the Comex in New York. Trading was 55 percent below the average for the past 100 days for this time, data compiled by Bloomberg show.

Holdings in gold-backed exchange-traded products fell 7.4 metric tons last week, 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 0.2 percent to $19.985 an ounce on Comex.

On the New York Mercantile Exchange, palladium futures for September delivery rose 1.3 percent to $871.70 an ounce, heading for a fourth straight advance and the longest rally in a month. Platinum futures for October delivery fell 0.4 percent to $1,472.30 an ounce.

Source: Bloomberg