By Halia Pavliva May 1 (Bloomberg) -- Gold futures fell, capping the biggest weekly decline in a month, as rising equities reduced demand for the precious metal as an alternative investment. Silver gained. U.S. stocks rose after consumer confidence and manufacturing jumped to their highest levels since the credit crisis intensified in September. About 70 percent of the companies in the Standard & Poor’s 500 Index have topped first- quarter earnings projections, the best performance since 2006. The results spurred speculation the recession may be easing. “We are seeing some people abandoning gold in favor of equities as they seem to believe that the worst of the financial woe is over,” said Philip Gotthelf, the president of Equidex Brokerage Group Inc. in Closter, New Jersey. Gold futures for June delivery fell $3, or 0.3 percent, to $888.20 an ounce on the Comex division of the New York Mercantile Exchange. The price fell 2.8 percent for the week, the most since the first week in April. Silver futures for July delivery gained 17.5 cents, or 1.4 percent, to $12.50 an ounce. The most-active contract slumped 5.1 percent last month, while gold slid 3.7 percent. “I am still bullish on gold,” Gotthelf said. “If the financial woes continue through June, the June contract will probably reach $1,000 an ounce. If the problems continue through July, we will see the October gold contract at $1,200 an ounce if not $1,500.” Stress Test The Federal Reserve is postponing the release of stress tests on the biggest U.S. banks until later next week, while executives debate preliminary findings with examiners, according to government and industry officials. The results were to be reported on May 4. Some investors buy gold and other precious metals to hedge against rising consumer prices. Benchmark stock indexes recovered from early losses after the Reuters/University of Michigan final index of consumer sentiment rose to 65.1, the second straight gain, from 57.3 in March. A separate report from the Institute for Supply Management showed manufacturing in the U.S. shrank in April at the slowest pace in seven months as a collapse in inventories caused orders and production to steady. “Continued improvement in the economy should reduce the need for safe-haven buying of gold,” Tom Pawlicki, an analyst at MF Global Ltd. in Chicago, said in a report, adding that he expects gold to trade between $850 and $920 in the near future. “Of course, geopolitical issues could boost safe-haven demand and Pakistan will be a central focus on that issue.” Dollar, IMF Gold also fell on speculation that the dollar will strengthen on signs that U.S. growth will resume later this year, and because the International Monetary Fund is expected to sell gold, John Gross, the president of J-E Gross & Co., a metal-industry consulting company, said in a telephone interview. “The dollar has the potential to go higher as we are beginning to see some signs that the worst of the recession may be over,” Gross said. “When you look at the European side of the equation, it’s clear that it will take them longer.” Jim Rogers, chairman of Rogers Holdings, said he is concerned some institutional gold reserves may be sold. “I own some gold, but I am not buying at the moment because the IMF, which is one of the largest owners of gold in the world, is desperate to sell its gold,” Rogers said in an interview with Bloomberg radio. “I’m not selling my gold.” The IMF “is trying to get permission from everybody,” Rogers said. “If and when they sell their gold, they may set a bottom. Who knows? It may go down to $700. They got a lot of gold to sell. If it does, I hope I’m brave enough and smart enough to buy more.” Confidence among U.S. consumers climbed more than forecast in April. Conditions are falling into place for the U.S. economy to begin growing again in the second half of 2009, according to economists at JPMorgan Chase & Co. and Barclays Capital Inc. The dollar rose as much as 0.2 percent against a six-currency basket before giving up its gains. To contact the reporter on this story: Halia Pavliva in New York athpavliva@bloomberg.net.
Gold Falls, Caps Biggest Weekly Drop in Month, as Equities Gain
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