By Ranjeetha Pakiam
Gold headed for the first weekly drop since May as investors turned to risk assets such as stocks, cutting demand for bullion as a haven.
The metal fell 2.4 percent this week and holdings in gold-backed funds are also set for the first weekly decline since May. Money has poured into global equities in the past three weeks as speculation grew that policy makers will do more to limit the fallout from the U.K.’s vote to leave the European Union.
Bullion, which touched a two-year high on Monday, is still up 26 percent this year on expectations that U.S. interest rates will remain low, making assets that don’t pay interest more attractive. Investors flocked to precious metals as the Brexit vote in June caused immediate turmoil across markets.
“Rising stocks and bond yields have both helped trigger a healthy consolidation in gold following the surge in recent weeks,” Ole Hansen, head of commodity strategy at Saxo Bank A/S, said by e-mail. “Hedge funds are likely to be have been the main sellers.”
Bullion for immediate delivery lost 0.1 percent to $1,334 an ounce by 11:18 a.m. in London, according to Bloomberg generic pricing. European stocks trimmed gains today following last night’s deadly terror attack in France.