Gold Declines for Second Day in London on Reduced Haven Demand

By Nicholas Larkin

Jan. 22 (Bloomberg) -- Gold fell for a second day in London on speculation government measures will help revive the global economy, reducing demand for the precious metal as a haven.

Shares climbed in Europe and Asia as Barack Obama’s nominee treasury secretary, Timothy Geithner, pledged an expanded and prolonged role in stabilizing banks. Bank of England Governor Mervyn King said Jan. 20 officials may start buying assets within weeks to loosen credit markets. Gold has fallen 3.8 percent this year.

“The rebound in stock markets” may be a negative for gold today, Peter Fertig, a consultant for Dresdner Kleinwort, said by phone from Hainburg, Germany. “Fear of nationalization of banks had been supportive” for bullion in recent days, he said.

Gold for immediate delivery slipped $5.45, or 0.6 percent, to $848.80 an ounce by 12:50 p.m. in London. February futures fell 0.2 percent to $848.80 in electronic trading on the Comex division of the New York Mercantile Exchange.

The metal declined to $847.75 an ounce in the morning “fixing” in London, used by some mining companies to sell production, from $849.25 at yesterday’s afternoon fixing. Still, spot prices are heading for their first weekly gain in three.

“There’s still a lot of nervousness in the market,” said Emanuel Georgouras, a precious-metals trader at Marex Financial Ltd. in London. “Gold is still an interesting place to put money” while prices are above $835 an ounce, he said.

Dollar’s Climb

Bullion’s loss this year compares with a 7.6 percent gain for the dollar versus the euro. The commodity typically moves in the opposite direction to the U.S. currency.

“The metal has decoupled from its high correlation with the dollar over the past two days, but this may be temporary,” Walter de Wet, an analyst at Standard Bank Ltd. in Johannesburg, wrote in a report. “Should the dollar continue to appreciate against the euro, gold will eventually move down.”

Gold held in exchange-traded funds managed by ETF Securities Ltd. fell for a second week, according to data on the company’s Web site. Gold assets declined to 1.898 million ounces from 1.902 million ounces on Jan. 15, Jersey, Channel Islands-based ETF Securities said.

Still, gold in the SPDR Gold Trust, the largest exchange- traded fund backed by bullion, expanded by almost 3 metric tons to a record 805.96 tons, according to data on the company’s Web site. Bullion held in exchange-traded funds climbed to a record 1,190 tons last year, the World Gold Council said on Jan. 20.

Among other metals for immediate delivery in London, silver declined 0.3 percent to $11.305 an ounce. Platinum added $5.25, or 0.6 percent, to $930 an ounce, and palladium was 0.1 percent higher at $184.75 an ounce.

To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net