London - Gold declined, heading for a second quarterly fall, as holdings in exchange-traded products slumped by the most on record and investors weighed the euro-area’s debt crisis against prospects for a US recovery.
Holdings in ETPs contracted 6.9 percent this quarter amid speculation that the US Federal Reserve will rein in stimulus.
The US Dollar Index, a gauge against six major counterparts, rose 4.1 percent this quarter, the biggest gain since the three months ended September 2011, amid signs the US economy is improving.
Cyprus’s banks opened for the first time in almost two weeks.
“The substantial ETF outflows are very worrying,” said Filip Petersson, a commodities strategist at SEB AB in Stockholm.
They represent “a major bear trigger.”
Bullion for immediate delivery fell 0.3 percent to $1,600.70 an ounce by 12:24 p.m. in London.
Prices have fallen 4.5 percent this quarter in the first back-to-back three-month losses since 2001.
While gold and silver lack momentum to go much higher, platinum and palladium have better prospects as they are less dependent on investment flows, the private-banking unit at Credit Suisse Group AG said in a report yesterday.
Gold rallied for a 12th year in 2012 as central banks boosted stimulus.
Spot platinum fell less than 0.1 percent to $1,581.82 an ounce, poised for a quarterly advance.
Holdings in ETPs expanded to a record 52.346 tons, according to data tracked by Bloomberg.
Silver for immediate delivery fell 0.1 percent to $28.6512 an ounce, heading for a second quarterly decline.
Palladium gained 0.5 percent to $770.88 an ounce, trimming a third quarterly gain. - Bloomberg News