Gold fell to a four-week low in London, dropping below $1,700 an ounce, as a stalemate in U.S. budget talks weighed on commodities.
Commodities retreated for the first time in four days as talks over the so-called fiscal cliff of spending cuts and tax increases remained deadlocked. European Union finance ministers meet in Brussels today to discuss measures to stem the debt crisis. Bullion pared some losses as the dollar reached a six- week low versus the euro.
“It’s more the risk aversion out of commodities which is probably having an impact on gold,” Peter Fertig, the owner of Quantitative Commodity Research Ltd. in Hainburg, Germany, said today by phone. Still, “there are arguments investors should buy gold on worries the U.S. economy could fall over the fiscal cliff,” he said, citing demand for a haven investment.
Gold for immediate delivery dropped 0.6 percent to $1,705.41 an ounce by 9:23 a.m. in London. Prices reached $1,696.78, the lowest since Nov. 6. Gold for February delivery was 0.9 percent lower at $1,706.40 on the Comex in New York.
Holdings in gold-backed exchange-traded products climbed 1.7 metric tons to a record 2,623.4 tons yesterday, data compiled by Bloomberg show. Prices are up 9.1 percent this year as central banks from Europe to China pledged more steps to spur economic growth.
Gold may gain as businesses temper spending and stimulus falls short, John Gilbert, chief investment officer at General Re-New England Asset Management, a unit of Warren Buffett’s Berkshire Hathaway Inc. (BRK/A), wrote in a newsletter. Buffett said in a February letter that investors should avoid bullion as it doesn’t have the potential of farmland or companies to produce wealth.
Silver for immediate delivery fell 1.1 percent to $33.2950 an ounce. Platinum was 0.6 percent lower at $1,596.13 an ounce. Palladium declined 1.2 percent to $683 an ounce.
Source: Bloomberg
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