Gold falls B150 amid world stock rally

Gold prices dropped by 150 baht per baht-weight at its opening in Bangkok on Saturday.

The Gold Traders Association announced the buying price at 18,150 baht and the selling price at 18,250 baht per baht-weight for gold bars.

For ornaments, the buying and selling prices were 17,888.80 baht and 18,650 baht per baht-weight respectively.

The prices changed twice on Friday, ending up 100 baht from the previous day.

In world markets, gains for equities are spurring investors to shun gold, with prices posting the biggest tumble in seven weeks, Bloomberg reported from New York.

As traders parse economic data for clues on whether US growth is fast enough to warrant a rise in interest rates, advances for shares are diminishing gold’s appeal as an alternative. The metal is floundering, and it’s been almost two weeks since prices sustained a move in either direction for more than a day, the longest period since September, according to data compiled by Bloomberg.

Prices fluctuated as reports this week showed conflicting data on the US housing market and orders for business equipment. The Federal Reserve begins a two day policy meeting on April 28. Higher rates diminish the allure of the metal, which usually only provides a return if prices rise, spurring investors to favour assets with better yield prospects such as equities and bonds.

“At this point, what you’ve had is no real indication that the economy would be slowing enough to back away from a rate increase this year,” Frank McGhee, the head dealer at Alliance Financial in Chicago, said in a telephone interview. “Even if we have a September rise in interest rates, then that still means we’re going to have a rate rise this year.”

On the Comex, gold futures for June delivery slumped 1.6% to settle at $1,175 an ounce at 1.43pm in New York, the biggest drop since March 6. Prices extended losses after the Nasdaq Composite Index extended its rally to a record.

‘Technical selling’

“Equities continue to pull money away from gold,” George Gero, a precious-metal strategist at RBC Capital Markets in New York, said in a telephone interview. “We also probably seeing some technical selling after prices fell below $1,190.”

While the Fed has ruled out raising rates when it meets in April, policy makers have left the door open for June. US reports earlier this week showed sales of previously owned homes jumped in March, while purchases of new ones fell more than forecast. Futures dropped 29% in the previous two years as the dollar surged and inflation remained muted.

“Investors are in a wait-and-watch mode, since they are waiting for the new statement from the Fed,” Tai Wong, the director of commodity products trading at BMO Capital Markets Corp in New York, said in a telephone interview. “It seems unlikely that we’ll see a breakout” before the meeting, he said.

Also on the Comex, silver futures for July delivery fell 1.2% to $15.68 an ounce. On the New York Mercantile Exchange, platinum dropped, while palladium was little changed.