Gold, the year’s best-performing commodity, dropped the most in almost seven months as rebounding global equities cut demand for a haven.
The metal slid as much as 2.5 percent in London on Monday. European stocks headed for the biggest two-day gain in more than four years as People’s Bank of China Governor Zhou Xiaochuan expressed faith in the economy, while a stronger dollar eroded the bullion’s appeal as an alternative investment.
Gold surged to a one-year high last week and investors have been hoarding metal through bullion-backed funds as a gauge of world stocks entered a bear market and the Federal Reserve signaled it may delay further monetary tightening. Low borrowing costs boost gold’s appeal because it doesn’t pay interest like some other assets.
Gold for immediate delivery slid 2.3 percent to $1,209.30 an ounce in New York, a back-to-back daily decline for the first time in a month, according to Bloomberg generic pricing. Prices are still up 14 percent this year, the best performance in the Bloomberg Commodity Index of 22 raw materials.
Chinese trading resumed after the week-long Lunar New Year holiday, while U.S. markets are closed Monday for the Presidents’ Day holiday.