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Gold Falls in Asia, Poised for Third Weekly Drop on Stocks Gain

13 Mar 2009, Singapore (Bloomberg) By Glenys Sim

Gold fell in Asia, poised for a third weekly decline and the longest losing streak since October, as a rebound in equities reduced investor demand for a haven and deflation concerns persisted.

Asian stocks rose as Japan and China signaled more measures to bolster their economies. The benchmark MSCI Asia Pacific Index was up 3.6 percent this week as bullion dropped 1.6 percent.

“Investment has been and is likely to remain the key to higher prices, and while the financial chaos should ensure it is well supported, a short-term dip is likely if the focus turns to deflationary economies, not collapsing banks,” VM Group analysts led by Carl Firman, wrote in a monthly report sponsored by Fortis.

Gold for immediate delivery fell as much as 0.5 percent to $922.28 an ounce, and traded at $924.10 at 3:24 p.m. in Singapore, paring a 3.2 percent gain made in the last two days.

Assets in the SPDR Gold Trust, the biggest such fund backed by bullion, advanced 0.3 percent to a record 1,041.53 metric tons yesterday, according to figures on the company’s Web site. The fund’s holdings are now larger than the 1,040.1 tons held by Switzerland in January, according to Swiss National Bank data.

“The best way to hold gold is to buy ETFs because you’re buying it in bulk, it’s traded through the exchange and you don’t have to deal with a counterparty,” Albert Cheng, the World Gold Council’s Far East managing director, said in a March 10 Bloomberg Television interview.

Among other precious metals for immediate delivery, silver was up 0.1 percent at $13.005 an ounce, platinum gained 0.7 percent to $1,056 an ounce, and palladium added 0.4 percent to $199.50 an ounce.

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