Gold posts longest slump of the year

Gold futures posted the longest slump in more than a month as a stronger dollar and equities near record highs lured away investors seeking higher returns. Industrial metals also fell.

A rally that pushed the Dow Jones Industrial Average above 20,000 for the first time, along with the stronger US currency and Treasury yields close to the highest this year, reduced demand for the metal as an alternative asset. Holdings in SPDR Gold Shares, the largest exchange-traded fund backed by bullion, fell to the lowest since March on Wednesday.

Gold slipped last week as solid corporate earnings buoyed confidence in the US economic outlook. Investor optimism on President Donald Trump’s policies aimed at paring regulation, cutting taxes and keeping jobs within the US borders is also curbing demand for haven assets such as bullion.

“It looks like gold will continue to see liquidation,” Frank Cholly, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. “We’re seeing a greater appetite for risk-on.”

Gold futures for April delivery fell 0.7 per cent to settle at $1,192.50 an ounce at 1.45pm on the Comex in New York, and third straight loss and the longest slump since December 22. The metal touched $1,186.60, the lowest for a most-active contract since January 11.

“I’d be surprised if the market doesn’t test $1,170 over the next couple of weeks,” Cholly said.

Copper slipped with the stronger dollar and as China winds down before a weeklong public holiday to mark the start of the Year of the Rooster in the Chinese lunar calendar. The Asian nation is the world’s biggest consumer of industrial metals.

Copper futures for March delivery declined 1.4 per cent to $2.673 a pound on the Comex in New York. That’s the biggest drop since January 17. With Chinese traders out of the market and the dollar moving higher, “you get the negative flows,” Mike Dragosits, senior commodity strategist at TD Securities in Toronto, said.