Gold Heads for Worst Quarterly Run Since 2001 on U.S. Economy

By Phoebe Sedgman 

Gold, trading little changed after dropping for three days, headed for the first back-to-back quarterly losses since 2001 as signs that the U.S. economy is recovering cut demand for the metal as a store of wealth.

Gold for immediate delivery was at $1,599.39 an ounce at 12:42 p.m. in Singapore from $1,600.05 yesterday. Prices have lost 4.5 percent this quarter as holdings in exchange-traded products fell 6.8 percent, the most on record. Bullion for June delivery gained 0.2 percent to $1,599.90 an ounce on the Comex.

Orders for U.S. durable goods climbed more than forecast in February and home pricesincreased the most since June 2006, reports showed yesterday, signaling that the recovery in the world’s biggest economy is gaining traction. Federal Reserve Chairman Ben S. Bernankesaid on March 20 that the U.S. central bank may adjust its monthly bond buying based on several measures, including payrolls, wages and jobless claims.

“As we see the U.S. recovery gaining momentum, that’s making funds flow back to the dollar and pushing it up,” said David Lennox, an analyst at Fat Prophets in Sydney. “That’s putting pricing pressure on gold.”

The Dollar Index, a gauge against six major trading partners, rose for a third day and is poised for a quarterly advance. Gold holdings in ETPs stood at 2,453.47 metric tons yesterday, according to data compiled by Bloomberg.

Dallas Fed President Richard Fisher said yesterday that he’d like the U.S. to reduce its mortgage-backed security purchases program amid signs that the economy will probably grow at about 3 percent by the end of the year. At present, the Fed buys $85 billion of securities a month to spur the recovery.

Silver for immediate delivery fell 0.2 percent to $28.695 an ounce, extending a second quarterly decline. Spot platinum traded little changed at $1,573.75 an ounce, while palladium lost 0.2 percent to $761.75 an ounce.

To contact the reporter for this story: Phoebe Sedgman in Melbourne atpsedgman2@bloomberg.net

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