Gold, Silver Futures Fall as Global Equity Markets Decline

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Gold and silver fell on speculation a decline in global equity markets will reduce investment demand for the precious metals.

Gold has often moved in step with stocks this year, rallying 2.6 percent in the previous two sessions as the Standard & Poor's 500 Index added 2.2 percent. The S&P fell as much as 1.4 percent today after pending home sales dropped. Gold is still up 8.3 percent this year.

``Gold is still subject to the overall movement of stocks,'' said Frank McGhee, head metals trader at Integrated Brokerage Services LLC in Chicago.

Gold futures for December delivery fell 80 cents, or 0.1 percent, to $690.70 an ounce on the Comex division of the New York Mercantile Exchange, after earlier dropping as much as 0.6 percent. Yesterday, the metal gained the most since June to the highest closing price since April 23.

Silver futures for December delivery fell 9.3 cents, or 0.8 percent, to $12.355 an ounce on the Comex. The metal is down 4.5 percent this year.

The S&P fell for the first day in three after a National Association of Realtors report showed the number of Americans signing contracts to buy previously owned homes in July dropped by the most since records began in 2001. A separate report showed declining sales of commercial properties.

Stocks in Asia and Europe also fell.

Still, gold's losses were limited on speculation a housing slump would force the Federal Reserve to cut interest rates to bolster the economy.

Dollar Boost 市場專業人士的看法

``Lower rates make people think the dollar will weaken and that could provide a boost to gold,'' said Chip Hanlon, president of Delta Global Advisors Inc. in Huntington Beach, California.

Interest-rate futures show traders see 43 percent odds the Fed will lower its benchmark rate to 4.25 percent from 5.25 percent by Dec. 11, compared with a 26 percent chance a day ago.

``We have a signal to go long on gold here,'' said Ron Goodis, futures trading director at Equidex Brokerage Group Inc. in Closter, New Jersey. ``If the Fed is going to lower rates, that means there's a major fallout from the subprime mortgage mess and that could bring buying into hard assets like gold.''

The dollar fell against the euro for the first day in three. The 13-nation currency reached a record $1.3852 on July 24 and traded as high as $1.3672 today.

Five of the past six bear markets for the U.S. currency have resulted in a higher gold price.

``If there's a problem with the dollar, money flows to gold,'' Goodis said.

JKL

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