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Singapore - Gold, the pacesetter among commodities this year, is coming back down to Earth.
The rally that’s made the precious metal the biggest gainer in 2016 on the Bloomberg Commodity Index faltered further on Monday, with spot prices set for the first back-to-back loss in a month as rising share markets and a firmer yuan sapped haven demand.
Bullion for immediate delivery sank as much as 1.9% to $1 214.68 an ounce and traded at $1 219.15 at 08:25, according to Bloomberg generic pricing. The metal, which dropped 0.7% on Friday, had surged to $1 263.48 on February 11, the highest since February 2015.
Gold has been the best performer among raw materials this year as a weakening global economy, the spread of negative interest rates and prospects for a weaker yuan spurred demand.
On Monday, equity markets surged and the Chinese currency gained ground after supportive comments from People’s Bank of China Governor Zhou Xiaochuan, strengthening risk appetite after a rally in US stocks on Friday.
‘Reversal in risk’
“We’ve seen a massive rebound in” US equities on Friday, Bernard Aw, a market strategist at IG Asia Pte in Singapore, said by phone. “So this actually means some kind of short-term reversal in risk sentiment toward more risk appetite.”
Miners’ shares fell. Newcrest Mining, which reported a drop in first-half earnings on Monday, lost as much as 1.8% in Sydney, while Zijin Mining Group dropped for the first time in more than a week in Hong Kong.
Holdings in bullion-backed exchange-traded products increased 0.3% to 1 592.3 metric tons on Friday, the highest since July, according to data compiled by Bloomberg. They’ve expanded 8.9% this year.
In other precious metals, spot silver lost as much as 2.7% to $15.3178 an ounce, while platinum fell 1.4% and palladium retreated 1.2%.
