Gold fell for a third day as a recovery in equities markets diminished the appeal of the metal as a haven and Goldman Sachs Group Inc. said the rally to a one-year high last week wasn’t justified.
Bullion for immediate delivery slid as much as 1.5 percent to $1,191.02 an ounce and traded at $1,196.57 at 3:59 p.m. in Singapore, according to Bloomberg generic pricing. The metal surged to $1,263.48 on Feb. 11, the highest level since February 2015. Shares of producers Newcrest Mining Ltd. and Zijin Mining Group Co. retreated.
Gold has pared its advance this year to 13 percent amid a rebound in Asian stocks, which is increasing risk appetite among investors after a flight to haven assets this year. Bullion markets may take comfort from European Central Bank President Mario Draghi’s comments Monday on his willingness to act should financial turmoil threaten price stability. Goldman Sachs recommended shorting the metal.
“The rally in equity markets has halted the upward move in gold for now,” said Jordan Eliseo, chief economist at Australian Bullion Co. in Sydney. The promise of more easing from the ECB and other developed market central banks will be supportive of bullion, though rallies in risk assets and the dollar will continue to exert downward pressure, he said in an e-mail.
The MSCI Asia Pacific Index rose 0.8 percent, extending a rally that lifted the regional equities gauge from the lowest level since 2012, as energy and financials shares climbed. The measure jumped 4.1 percent Monday, the biggest advance since September.
Gold prices will slump back to $1,100 an ounce in three months and $1,000 an ounce in 12 months, Goldman analysts including Jeffrey Currie and Max Layton wrote in a report received on Tuesday, reiterating targets in a note last week. It’s “time to sell the fear barometer,” the bank said.
Bullion of 99.99 percent purity declined 0.9 percent to 251.39 yuan a gram ($1,200.81 an ounce) on the Shanghai Gold Exchange. Spot silver fell as much as 1.3 percent to $15.1432 an ounce in London, platinum dropped 0.7 percent while palladium slid 0.6 percent.