Gold dips as stocks fall and economic worry hurts PGMs

By Chikako Mogi

TOKYO (BestGrowthStock) – Spot gold fell more than 1 percent to two-week lows on Friday as investors sold to cover losses in other markets, including stocks, while platinum group metals hit three-month lows on worries about industrial demand.

Asian stocks were down, with Japan’s benchmark Nikkei average hitting a five-month low (.T: ) as exporters were hurt after the yen strengthened against the euro on worries about disunity among euro zone leaders on how to address the region’s debt crisis.

Palladium reversed earlier losses to post minor gains, but platinum extended declines into the seventh day in a row on worries about weakening industrial demand for the metal as Europe’s debt problems are seen hurting the region’s economy.

Spot gold was down 0.3 percent at $1,178.30 per ounce at 0549 GMT (1:49 a.m. ET) after marking a two-week low of $1,166.50, compared with $1,181.10 an ounce late in New York on Thursday. It hit a record high $1,248.95 an ounce on May 14.

“As of now, investors are more focused on selling gold to cover losses in other assets, particularly as stocks are falling, than seeing the metal as a safe haven,” said Kazuhiko Saito, chief commodities analyst at futures trading company Fujitomi.

“Gold has risen sharply and after hitting a peak. Investors became wary of the high price levels,” Saito said, adding that gold has not yet come down enough for investors to buy back again.

“Some are also speculating that governments under fiscal scrutiny might sell their gold holdings,” Saito said.

U.S. gold futures for June delivery fell 0.9 percent to $1,178.30 an ounce from $1,188.60 on the COMEX division of the NYMEX.

Wakako Harada, a senior trader at Mitsubishi Corp in Tokyo, said the market currently appears to be in a panic, with investors feeling they needed to cover losses in other assets hit by financial turmoil stemming from the euro zone’s debt crisis.

Spot gold is on the way to falling 4.5 percent this week, its worst weekly performance since late February.

“Once this round of selling subsides, investors will think where is the best to put their money in light of fundamentals,” helping to support liquid assets such as gold, she said.

Spot platinum was down 0.6 percent at $1,499.50 per ounce, extending its fall after dropping more than 7 percent on Thursday. It earlier fell almost 4 percent to $1,449, its lowest since February 5.

Spot palladium fell as low as $393.00, also a three-month low, before reversing the losses to $419.50 per ounce. On Thursday it lost 12 percent to $412.75.

The world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust, said its holdings totaled 1,220.152 tonnes as of May 20, unchanged from the previous business day when they hit a record high.

The euro rose on Friday as a bout of short-covering extended after its slide to a four-year low earlier this week.

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(Additional reporting by Risa Maeda; Editing by Michael Watson)

Gold dips as stocks fall and economic worry hurts PGMs