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Gold Falls in New York on Speculation Physical Demand Is Slowing

Feb. 4 (Bloomberg) -- Gold fell in New York as investors weighed slowing physical demand against concern that global growth may be faltering. Palladium was little changed after falling to a one-month low.

Bullion futures rose 1.6 percent yesterday, the most since Jan. 23, as global equities declined and a selloff in emerging- market currencies accelerated after Institute for Supply Management data signaled a slowdown in U.S. manufacturing. UBS AG said it would continue selling gold on any rallies for now.

Gold slid 28 percent last year as some investors lost faith in the metal as a store of value, and the Federal Reserve said last week it will trim monthly bond buying by $10 billion. Gold rebounded in January as lower prices spurred more physical buying, particularly in Asia, and as a drop in emerging-market currencies and global equities increased demand for an alternative investment. China’s New Year holiday runs to Feb. 6.

“Further weakness on the global equity market, as well as a small correction in the U.S. dollar, helped gold progress,” Andrey Kryuchenkov, an analyst at VTB Capital in London, wrote today in a report. “We prefer the downside given a lack of investor conviction in bullion’s upside and easing physical flows.”

Bullion for April delivery fell 0.5 percent to $1,253.30 an ounce by 7:38 a.m. on the Comex in New York. Futures trading volume was 27 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg showed. Gold for immediate delivery lost 0.3 percent to $1,253.53.

ETP Holdings

Holdings in gold-backed exchange-traded products are near the lowest level since October 2009, data compiled by Bloomberg show. The “bulk” of those wanting to cut or exit ETP investments made about five years ago have probably already done so, UBS said in a report today.

Silver for delivery in March fell 0.3 percent to $19.355 an ounce. Palladium for the same month was little changed at $703.75 an ounce. It reached $698.60, the lowest since Dec. 27, after falling for an eight straight day yesterday, the worst run since 2011. Platinum for April delivery declined 0.4 percent to $1,381.60 an ounce.

South African platinum strikes that began Jan. 23 are costing the nation about $36 million a day, the mining chamber estimated. Anglo American Platinum Ltd., Impala Platinum Holdings Ltd. and Lonmin Plc, the largest producers, are meeting with the Association of Mineworkers and Construction Union, which represents more than 70,000 members, today.

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