Gold Weakens as Investors Sell After Gains; Platinum Declines

By Glenys Sim

Feb. 12 (Bloomberg) -- Gold weakened in Asia as investors sold the precious metal after it jumped to the highest in over six months on haven investment demand. Platinum fell.

Bullion climbed to $947.88 an ounce yesterday, the highest since July 23, on concern the U.S. government’s plan to rescue banks may not revive the economy.

“We see a little bit of liquidation every time the market goes up overnight,” Ronald Leung, director, Lee Cheong Gold Dealers (Hong Kong) Ltd., said by phone from Hong Kong. “It’s been quiet in Asia these past few weeks as there’s little fresh news to offer direction.”

Bullion for immediate delivery fell as much as 0.4 percent to $935.40 an ounce, before trading at $935.99 at 11:53 a.m. in Singapore. Silver fell 0.2 percent to $13.51 an ounce.

Gold for April delivery was 0.8 percent lower at $937.30 in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.

“There’s only investment demand at these levels,” said Leung. “We don’t see any physical buying from the jewelers. I think they’re waiting for a correction to enter around the $850- $900 level.”

Holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, expanded to a record 935.09 metric tons yesterday, the 14th time since Jan. 14.

December-delivery gold in Tokyo gained 3 percent to 2,715 yen a gram ($940 an ounce), while Shanghai gold for June delivery added 2.6 percent to 204.70 yuan a gram ($933 an ounce).

Platinum Declines

Platinum was down 1.1 percent at $1,058 an ounce, and palladium advanced 1.3 percent to $217.50 an ounce as of 11:56 a.m. in Singapore. The metals are used mostly in jewelry and pollution-control devices in cars.

“The main driver of demand for platinum right now is investment demand, a situation not unlike gold,” Michael Jansen, an analyst at JPMorgan Securities Ltd. in London, said in an e- mail. “The demand-side fundamentals are still quite poor and suggest that this rally is likely to lose momentum.”

Automakers around the world are cutting production and jobs as demand from the U.S. to Europe and China slumps.

Toyota Motor Corp., the world’s largest carmaker, said Feb. 6 its loss this year may be three times earlier estimates as car sales in the U.S. and Japan plunge. Nissan Motor Co., Japan’s third-largest automaker, said it will slash 20,000 jobs and post its first loss in nine years as the recession cripples car demand.

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