‘Suffering Fatigue’

“Some of the key pillars of the gold bull market look like they’re suffering fatigue,” Peter Richardson, an analyst at Morgan Stanley, said by telephone from Melbourne today. “The gold market’s probably started to price in the prospect that beleaguered members of the euro zone might be forced to sell gold to raise part of the funding, and there are much bigger holders in that category than Cyprus.”

SPDR Gold Trust holdings fell 22.9 tons to 1,158.56 tons on April 12, the lowest since April 28, 2010, its website shows. Global assets fell 6.9 percent in the first quarter, the most since at least 2004, data compiled by Bloomberg show. They’re about 8.6 percent below the Dec. 20 record.

Gold has ceased to be a haven for investors after it fell when the euro was close to collapse last year, billionaire investor George Soros said in an interview with the South China Morning Post published April 8. Soros cut his stake in the SPDR gold fund by 55 percent in the fourth quarter, a government filing showed.

U.S. Growth

“The demise of gold is still at an early stage,” Georgette Boele, a commodities strategist at ABN Amro Group NV, wrote in a note today. “Other assets will become increasingly more attractive as the growth outlook improves.”

The Fed has said further improvement in the labor market is needed to consider reducing its stimulus. While U.S. growth will probably slow to 1.6 percent this quarter from 2.9 percent in 2013’s first three months, it will then accelerate every quarter though mid-2014, economists surveyed by Bloomberg forecast. U.S. stocks advanced last week, sending the Standard & Poor’s 500 Index to an all-time high, amid optimism that corporate earnings growth will continue. The index is up 11 percent this year.

Goldman cut its three-month gold target to $1,530 from $1,615 and lowered the 12-month forecast to $1,390 from $1,550, analysts Damien Courvalin and Jeffrey Currie said in an April 10 report. While higher inflation may be the catalyst for the next cycle, that’s probably several years away, they wrote.

‘Buying Opportunity’

Gold’s plunge has pushed its 14-day relative strength index to 18.1, below the level of 30 that indicates to some analysts who study technical charts that a rebound may be imminent.