Gold suffers second down day after forecast cut

SAN FRANCISCO, MarketWatch (23/01) — Gold futures suffered a loss on Wednesday for a second day in a row, with investors discouraged by a bearish call from yet another investment bank.

Gold for February delivery fell $3.20, or 0.3%, to settle at $1,238.60 an ounce on the Comex division of the New York Mercantile Exchange, its lowest close in a week. March silver fell 3 cents, or 0.2%, to $19.84 an ounce after Tuesday’s 2.1% drop. Morgan Stanley cut its gold targets for the next two years, with the bank’s analysts saying strength in stocks as well as regulatory pressures will hurt prices. The bank reduced its 2014 average gold-price forecast by 11.6% to $1,160 an ounce and dropped its 2015 forecast average by 12.5% to $1,138 an ounce. Meanwhile, seasonal demand for gold related to the Chinese Lunar New Year has been good, said Jeffrey Wright, managing director at H.C. Wainwright, but the demand has not been close to record levels in the last couple of years. Gold on Tuesday gave back a big chunk of the gains that brought it to five-week highs on Friday as the dollar strengthened and as bearish forecasts for the year took their toll. Also weighing on the precious metal Tuesday, the International Monetary Fund raised its global growth forecast for the first time in almost two years. The economic data calendar has been sparse this week due to Monday’s Martin Luther King Jr. holiday. On Thursday, the market will see data on weekly jobless claims, the Markit “flash” PMI, existing home sales and leading indicators. The market also awaits the Jan. 28-29 meeting of the U.S. central bank’s Federal Open Market Committee. At its last meeting in December, the Fed announced that it would start to taper its bond-buying program in January to $75 billion from $85 billion a month. Ahead of the meeting, investors have expected continued quantitative-easing tapering by the Fed, analysts at Sharps Pixley said in a note Wednesday. Last Friday, the SPDR Gold Trust, the largest gold exchange-traded fund, saw the largest percentage increase in holdings since November 2011, Sharps Pixley analysts said, and the U.S. Mint January gold coin sales will likely see the highest monthly jump since April 2013. The SPDR Gold Trust slipped 0.2% in afternoon dealings. Metals-mining shares were broadly lower, with the Philadelphia Gold and Silver Index losing 2.3%. Shares of Newmont Mining Corp.  fell 2.2%. The company provided an update on Indonesia export issues related to its Batu Hijau copper and gold mine. Back on Comex Wednesday, platinum for April delivery closed up $8.90, or 0.6%, at $1,462.40 an ounce ahead of planned labor strikes at platinum mines in South Africa. March palladium added 80 cents, or 0.1%, to $748.85 an ounce. High-grade copper for March delivery slipped by 1.4 cents, or 0.4%, to $3.34 a pound.