(Bloomberg News) Gold is poised for the worst run of monthly losses in almost 13 years as concern that Europe's fiscal crisis is escalating drove investors to seek the dollar as a haven over the precious metal.
Spot gold was little changed at $1,562.63 an ounce at 10:31 a.m. in Singapore, after climbing 0.5 percent yesterday. Bullion is 6.1 percent lower in May for its biggest drop this year as the dollar rallied 5.4 percent against a six-currency basket including the euro. A fourth monthly decline would be the metal's longest run of losses since the period to August 1999.
Italy failed to meet its maximum target at a debt sale yesterday, Spain struggled to bolster its banks and a Greek poll showed gains for parties opposed to austerity that came with an international bailout, driving the euro to a two-year low against the dollar. Data showed Japan's industrial production rose less than forecast in April, while the number of Americans buying previously owned homes fell in April by the most in a year, helping Asian stocks and commodities including oil and copper extend declines today.
"There's definitely been a flight to the dollar rather than gold as a shelter from the crisis in Europe, which doesn't look like it will abate soon," said Wang Xiaoli, chief investment strategist at CITICS Futures Co., a unit of China's biggest listed brokerage. "We're encouraged by the gains made by gold yesterday even as the dollar strengthened."
The daily correlation coefficient between gold and the dollar is at minus 0.301, compared with minus 0.169 in October, data compiled by Bloomberg show. A figure of minus 1 means the two tend to move in opposite directions, and 1 means they move in lockstep. Holdings in the SPDR Gold Trust, the biggest bullion-backed exchange-traded fund, are set for a third monthly decline, according to data on the company's website.
August-delivery bullion fell as much as 0.3 percent to $1,561.40 an ounce on Comex in New York and was last at $1,564. Trading volumes set a record of 484,721 contracts on May 29, which included electronic trading while the floor was closed on May 28 for Memorial Day, according to the exchange.
Cash platinum rose for the first day in three, gaining as much as 0.6 percent to $1,409 an ounce, before trading at $1,401.75. One ounce of platinum bought as little as 0.8932 ounce of gold today, the least since Jan. 11, according to data compiled by Bloomberg. The metal, which fell to the lowest level this year yesterday, is on course for a third monthly drop, the longest period of decline since 2008.
Spot silver fell as much as 0.5 percent to $27.7625 an ounce, and was last at $27.85. It's set for a third monthly loss, also the worst run since 2008. Palladium slid as much as 0.3 percent to $605 an ounce, before trading at $607, down 11 percent for the worst monthly performance since September.