The MSCI World Index of equities gained as much as 1.5 per cent today after plunging almost 10 per cent in May. Gold surged to a record last month on demand for a haven against tumbling stocks and the euro.

“The flight-to-quality appeal of gold has been put on the back burner,” said Adam Klopfenstein, a senior market strategist at Lind-Waldock in Chicago. “Traders and investors are embracing risk again.”

Gold futures for delivery in August dropped $US12.60, or 1 per cent, to $US1210 an ounce on the Comex in New York, the biggest decline since May 21. Earlier, the price touched $US1202.40, the lowest level since May 25.

This year, the metal has outperformed equities, bonds and most commodities as Europe’s sovereign-debt crisis boosted demand for a store of value.

“In the short term, strength in equities could suppress gold prices,” said Bayram Dincer, a commodity analyst at LGT Capital Management in Pfaeffikon, Switzerland.

Gold climbed to an all-time high of $US1249.70 on May 14 and has gained in all major currencies in 2010, led by a 30 per cent increase in metal priced in euros.

Investors may buy gold as an alternative to the yen, which dropped against the dollar today on speculation that Japan’s next leader will embrace a weaker currency.

“Gold functions as a currency now,” said Frank Lesh, a trader at FuturePath Trading LLC in Chicago.

Silver futures for July delivery dropped 38.4 US cents, or 2.1 per cent, to $US17.931 an ounce on the Comex.

Platinum futures for July delivery fell $US7.50, or 0.5 per cent, to $US1542.90 an ounce on the New York Mercantile Exchange.

Palladium futures for September delivery declined $US2.50, or 0.6 per cent, to $US450.80 an ounce.

Posted by Shayne Heffernan on Jun 4th, 2010and filed underEquities, Latest News, Markets, USA.You can follow any responses to this entry through theRSS 2.0You can leave a response by filling following comment form or trackback to this entry from your site