Gold falls as rising U.S. dollar prompts sales

The U.S. Dollar Index, a six-currency gauge of the greenback's value, added as much as 0.3 percent Friday. The measure has dropped 8.1 percent this year as gold futures have advanced 36 percent. Futures, which typically move inversely to the dollar, reached a record US$1,227.50 an ounce yesterday.

“The dollar is strengthening a little bit,” Sagiv Perez, a senior dealer at Finotec Trading U.K. in London, said by phone Friday.

Bullion futures for February delivery on the New York Mercantile Exchange's Comex unit slid US$13.10, or 1.1 percent, to US$1,205.20 an ounce by 4:39 a.m. local time.

The metal is up 2.5 percent this week, heading for a fifth gain. Gold for immediate delivery in London was 0.3 percent lower at US$1,204.30 an ounce.

“The dollar's rebound is knocking some wind out of commodities,” said Chung Soon Oh, a trader with Hyundai Futures Co. in Seoul.

Gold's rally has pushed its 14-day relative strength index, a gauge of whether a commodity is overbought or oversold, to 75.37, above the level of 70 viewed by some investors and analysts who use technical charts as signaling a drop. The index yesterday climbed above 80.

Silver for immediate delivery in London fell 0.2 percent to US$18.795 an ounce. Palladium lost 0.9 percent to US$379.25 an ounce, and platinum declined 0.2 percent to US$1,482.50 an ounce.

The U.S. dollar has sunk as the Federal Reserve kept benchmark U.S. interest rates near zero since December 2008 in a bid to revive lending after the worst financial crisis since World War II. Fed officials acknowledged last month that the record-low borrowing costs might fuel “excessive” financial-market speculation and perhaps dislodge expectations for low inflation.

Nineteen of 24 traders, investors and analysts surveyed by Bloomberg, or 79 percent, said bullion would gain next week. Five forecast lower prices. The metal has rallied on news that central banks including India and Russia increased their gold holdings and on speculation that governments, the biggest bullion holders, will make more purchases.

Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, increased for a fourth day, adding 0.3 metric ton to 1,131.49 tons yesterday, according to the company's Web site. The fund's holdings reached a record 1,134 tons on June 1.

Subscribe to The China Post and save 25%. Click here

SharePrintEmail

Write a Comment

Enter your comments - 3000 characters max

Type in image code

Submit

 Receive China Post promos Respond to this email