By Glenys Sim
Feb. 19 (Bloomberg) -- Gold fell in Asia as some investors sold the precious metal following its climb to a seven-month high on concerns about a worsening global recession.
Bullion’s 14-day relative strength index held above 70, a chart signal that prices may be set to drop. The metal climbed to $987.71 an ounce yesterday as investors sought a safe-haven asset.
“The market might see a test of the $1,000 mark in the days ahead should risk aversion continue, however, $1,000 is an important psychological barrier and will be hard to breach at the first instance,” said Tobias Merath, head of commodity research at Credit Suisse Group in Singapore.
Immediate-delivery gold dropped 1.1 percent to $974.47 an ounce at 3:21 p.m. in Singapore. Gold for April delivery fell 0.2 percent to $976.60 in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.
Economic stimulus plans by governments around the world were likely to drive inflation, stoking demand for gold as a hedge, said Philip Gotthelf, the president of Equidex Brokerage Group Inc., in a Bloomberg Television interview.
“We’re probably going to have to print more and more money and the more money you print, the less valuable it is, so smart investors are moving into hard assets that can hedge against those kinds of devaluations,” he said. “Gold represents a safe haven in a deflationary panic market as well as in an anticipatory inflationary market.”
President Barack Obama outlined a $75 billion plan to help as many as 5 million U.S. homeowners refinance mortgage loans. He signed a $787 billion U.S. stimulus bill Feb. 17, increasing the government’s commitments to $9.7 trillion to ease the recession and the banking crisis.
Investment Demand
Gold holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, gained to a record 1,024.09 metric tons as of yesterday, placing it just behind the 1,040 tons held by Switzerland, the world’s sixth-largest stockpile.
A lot of purchases aren’t just by institutions, according to Rozanna Wozniak, the World Gold Council’s investment research manager.
“We’re talking about ordinary people not knowing what to do with their savings -- equity markets are suffering, housing markets are suffering -- and so they’re buying gold,” Wozniak said in a Bloomberg Television interview.
December-delivery gold in Tokyo was up 1.8 percent at 2,946 yen a gram ($980 an ounce), while Shanghai gold for June delivery rose 0.6 percent to 214.10 yuan a gram ($974 an ounce).
Bullion priced in Australian and New Zealand dollars rose to records yesterday.
Among other precious metals for immediate delivery, silver fell 0.5 percent to $14.30 an ounce, platinum was down 2.1 percent at $1,079 an ounce, and palladium declined 0.2 percent to $218.50 an ounce as of 3:26 p.m. in Singapore.
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
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