Gold May Drop as Dollar Recovers Against Basket of Currencies
(Bloomberg) — Gold, little changed in Asian trading, may decline as the dollar rises from the lowest level this year, curbing demand for the precious metal.
Bullion may also drop as gold sales proposed by the International Monetary Fund damp the price outlook. The Dollar Index, a six-currency gauge of the greenback’s strength, traded little changed after dipping to a 2009 low before the release of a report expected to show U.S. manufacturing conditions were their best in almost a year last month.
“Gold is swinging in small losses and gains based on the dollar’s moves,” Hwang Il Doo, a senior trader with KEB Futures Co. in Seoul, said by telephone. The metal “may find it difficult to see upward momentum building given the IMF’s possible sales may weigh heavily on investors’ minds.”
Gold for immediate delivery fell 0.1 percent to 953.03 an ounce as of 2:27 p.m. in Singapore, after rising as much as 0.3 percent to 957.13. The metal gained 3 percent in July, following a 5.4 percent drop in June. The Dollar Index was at 78.30 after earlier dropping as much as 0.4 percent to 78.05.
The IMF will probably sell 200 metric tons of gold annually starting next year, “potentially weighing on prices,” Citigroup said in a July 31 report. Gold will fall to $850 an ounce in the second half of 2010, Citigroup Sydney-based analyst Alan Heap wrote in the report.
Gold for December delivery, the most active contract, fell 0.1 percent to $955.10 an ounce on the Comex division of the New York Mercantile Exchange.
Hedge-fund managers and other large speculators trimmed their bets on rising gold prices last week, according to U.S. Commodity Futures Trading Commission data. Net-long positions, the difference between orders to buy and sell the commodity, fell 0.3 percent to 172,771 contracts on Comex at July 28, the Washington-based commission said.
Among other precious metals for immediate delivery, silver rose 1.5 percent to 14.135 an ounce, platinum fell 0.3 percent to $1,209 an ounce and palladium gained 0.7 percent to $264.50.
Categorised as: Gold News