Gold Declines a Third Day in Asia on Reduced Safe Haven Appeal

By Glenys Sim

Jan. 29 (Bloomberg) -- Gold fell for a third day in Asia as the U.S., the world’s largest economy, took measures to ease a financial crisis, eroding demand for haven investments.

President Barack Obama’s administration prepared a plan to absorb toxic bank assets, sending gold down 1.8 percent in the past two days. The Federal Reserve said yesterday it’s prepared to buy Treasury securities to improve credit markets.

“Safe-haven-related interest in the precious metal waned as President Obama is currently investigating additional measures to support the banking system in the U.S.,” Anne-Laure Tremblay, an analyst at BNP Paribas said in an e-mail.

Bullion for immediate delivery dropped as much as 0.5 percent to $882.90 an ounce, and traded at $885.13 at 10:06 a.m. in Singapore.

Gold for February delivery was down 0.4 percent at $884.50 in after-hours electronic trading on the Comex division of the New York Mercantile Exchange, while gold on the Tokyo Commodity Exchange was little changed at 2,575 yen a gram ($887 an ounce).

“The U.S. dollar should continue to appreciate, which should weigh on gold prices,” said Tremblay.

The dollar rose against the euro, pound and yen on the Federal Reserve’s plan to resuscitate lending, and after the U.S. House passed Obama’s $819 billion stimulus package.

Among other precious metals for immediate delivery, silver fell 0.8 percent to $11.91 an ounce, platinum lost 0.9 percent to $948.25 an ounce, and palladium fell 0.5 percent to $189.50 an ounce as of 10:12 a.m. Singapore time.

To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net