Gold Falls for Sixth Session as Equities Drop; Silver Declines

March 2 (Bloomberg) -- Gold fell for the sixth straight session, the longest slump since October, as some investors sold the precious metal to cover losses in equity markets. Silver also declined.

The Standard & Poor’s 500 Index fell as much as 4.2 percent today, after tumbling 11 percent in February. Investment in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, reached a record 1,029.3 metric tons on Feb. 26, after gold topped $1,000 an ounce for the first time in 11 months.

“As things get a little uglier in the stock market, we might see some selling of gold for margin calls,” said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. “There’s some weight on gold now.”

Gold futures for April delivery fell $2.50, or 0.3 percent, to $940 an ounce on the Comex division of the New York Mercantile Exchange. The metal dropped 6 percent last week.

Silver futures for May delivery declined 4 cents, or 0.3 percent, to $13.07 an ounce. The metal rose 4.3 percent in February.

Stocks in Asia and Europe dropped, and the Dow Jones Industrial Average slid below 7,000 for the first time since 1997. Manufacturing in the U.S. contracted in February for the 13th consecutive month. American International Group Inc. posted the worst quarterly loss by any U.S. corporation and is asking the government for more help.

“If stocks are under pressure, the margin clerks become active once again, and they shall look to gold as a place to raise liquidity,” said Dennis Gartman, an economist and the editor of the Suffolk, Virginia-based Gartman Letter.

Store of Value

Still, the slide in gold prices may attract investors looking for a store of value, some analysts said. The metal has gained 6.3 percent this year, while the S&P 500 has dropped more than 21 percent.

“Gold is a good placeholder of value,” said Tom Hartmann, a commodity analyst at Altavest Worldwide Trading Inc. in Mission Viejo, California. “If one is scared about their cash sitting in the bank or short-term stock volatility, then perhaps gold would be a place to tuck away some money.”