* U.S. futures, cash gold at lowest since December
* Coming Up: U.S. build permits: change mm Apr; 1230 GMT
(Updates prices, quotes)
By Lewa Pardomuan
SINGAPORE, May 16 (Reuters) – Gold extended losses on
Wednesday to slip to its weakest level since late December after
the collapse of efforts in Greece to form a new government,
prompting investors to cut exposure to the precious metal.
Bullion has this year been moving in tandem with assets that
are perceived to be risky, shedding its status as a safe haven
in times of economic instability.
Concerns about upheaval in the euro zone hit the euro and
sent share prices lower across Asia as Greek political leaders
meet Wednesday to form a caretaker government that will lead the
country into its second election in just over a month.
U.S. June gold futures, which often dictate spot
gold, dropped more than 1 percent to a low of $1,529.2 an ounce,
their lowest since Dec. 29. Cash gold was also at a 4-1/2 month
low.
“Everybody is rushing to buy the U.S. dollar. A strong
dollar is negative for gold for the time being,” said Ronald
Leung, director of Lee Cheong Gold Dealers in Hong Kong, adding
that demand from jewellers was limited due to volatile prices.
“Jewellers don’t know what to do. Maybe when the price has
stabilised at some level, they will start to re-enter the
market. There’s a bit of scale-down buying.”
Spot gold was down $13.34 at $1,530.76 an ounce by
0639 GMT, having hit an intraday low of $1,529.43.
Gold rallied to a record of around $1,920 an ounce in 2011,
when investors flocked to the metal as a safe haven during the
debt crisis in Europe. But bullion is moving with riskier assets
this year as investors turn to the safety of the dollar and the
euro hits multi-month lows.
“It’s risk aversion caused by concerns about Greece. Tokyo
stock exchange also fell today, so everybody requires the
dollar,” said a bullion dealer in Tokyo, adding that investors
cashed in gold to cover losses in other markets.
Money managers in gold futures and options slashed their net
long positions by 20 percent to the lowest level since December
2008, as investors aggressively unwound their bullish bets in
the precious metal after a sharp price pullback.
The euro hit a four-month low on Wednesday, a day after
Greece called a new election that may hand victory to leftists
opposed to the terms of an EU bailout and raise the risk of the
country exiting the euro zone.
Party leaders will convene at the presidential palace at 2
p.m. (1100 GMT), but said they had little hope President Karolos
Papoulias’s offer would resolve a political crisis that has
fuelled speculation Greece’s days in the euro zone are numbered.
In equity markets, the Nikkei lost 1.1 percent, while
MSCI’s broadest index of Asia-Pacific shares outside Japan
extended losses for the fourth consecutive day,
sliding nearly 3 percent to a new 4-month low.
In the physical market in Singapore, jewellery makers from
Thailand snapped up gold on the lower prices, while buyers from
top consumer India could also return after buying some gold
overnight.
“Definitely physical buying has gone up, although demand is
not overwhelming. Indonesia has slowed down because there’s a
public holiday tomorrow, while Thailand is buying,” said a
dealer in Singapore.
“India did buy gold last night. They are not really in the
market yet today, but I am sure they will be buying.”
The wedding season is underway in India and will taper off
by the end of the month. Gold jewellery is an essential part of
the dowry Indian parents give to their daughters at weddings.
Precious metals prices 0639 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1530.76 -13.34 -0.86 -2.11
Spot Silver 27.30 -0.39 -1.41 -1.41
Spot Platinum 1419.94 -6.36 -0.45 1.93
Spot Palladium 590.47 -3.03 -0.51 -9.51
COMEX GOLD JUN2 1530.80 -26.30 -1.69 -2.30 28767
COMEX SILVER JUL2 27.28 -0.80 -2.85 -2.27 6965
Euro/Dollar 1.2686
Dollar/Yen 80.33
COMEX gold and silver contracts show the most active months
(Editing by Clarence Fernandez)
