Darren Kugler
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Darren Kugler in Commodities,

Gold Futures Drop by Most in Three Weeks After Greek Election

Gold futures fell the most in three weeks on speculation an anti-austerity party’s victory in Greek elections won’t result in the country leaving the currency bloc.

Greek Prime Minister-elect Alexis Tsipras formed a government with another party after Syriza came within two seats of an absolute majority with most votes counted. He has pledged to keep the nation within the single currency area as he negotiates a writedown of Greek debt and eases budget constraints.

Gold touched a five-month high last week after the European Central Bank announced plans to increase stimulus to revive inflation. Investors have boosted holdings in gold-backed funds.

“The market has been trading on uncertainty surrounding central bank action and the Greek elections for some time, so to see some profit-taking is not at all surprising,” Eugen Weinberg, an analyst atCommerzbank AG (CBK) in Frankfurt, said by phone.

Gold for February delivery declined as much as 1.3 percent to $1,275.60 an ounce, the most since Jan. 2. It was at $1,279 by 7:12 a.m. on the Comex in New York. Gold for immediate delivery fell 1.1 percent to $1,279.37 an ounce.

Futures trading volumes were 52 percent above the average for the time of day over the past 100 days. Holdings in gold-backed exchange-traded products are at the highest since November, data compiled by Bloomberg show. Investors added 23.3 metric tons last week, the most in more than two years.

Money managers and other speculators raised their net-long position, or bet on higher prices, by 27 percent in the week ended Jan. 20, U.S. Commodity Futures Trading Commission data show.

Silver for March delivery declined 2.2 percent to $17.90 an ounce in New York. Platinum fell 1.5 percent to $1,249.50 an ounce, while palladium lost 1 percent to $766.65 an ounce.