Gold futures dropped to a one-month low on speculation that President Barack Obama’s plan to restrict U.S. bank trading will reduce investment demand for commodities, including precious metals. The proposal to limit risk taking by banks, preventing investments in hedge funds and private equity pools, may cost Goldman Sachs Group Inc. $4.67 billion in revenue next year, JPMorgan Chase & Co. said in a report. Investors poured $60 billion into raw materials in 2009, according to a Barclays Capital survey, fueling the biggest commodity rally since 1979.
“President Obama’s restrictions on bank trading could undermine the gold market, if it prevents investment from moving into risk markets,” said Tom Pawlicki, an MF Global Inc. analyst in Chicago. “Gold has correlated well with risk markets in the past year, and yesterday’s events sent investment into Treasuries rather than gold and stocks.” Gold futures for February delivery dropped $13.50, or 1.2 percent, to $1,089.70 an ounce on the New York Mercantile Exchange’s Comex unit, dropping 3.6 percent this week.
Earlier, the most active contract touched $1,081.90, the lowest price since Dec. 23. Gold fell for the third straight day, the longest slump in six weeks. Last year, investment in the SPDR Gold Trust, the biggest exchange traded fund backed by the metal, surged 45 percent to as much as 1,134 metric tons. The total value of the fund grew 85 percent to $40 billion. Gold futures jumped 24 percent in 2009, the ninth straight annual gain, touching a record of $1,227.50 last month in New York.....Read the entire article.
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