Gold fell for the fifth time in six days in Asia as the U.S. dollar's strength kept a lid on investor demand for the precious metal as an alternative asset.
The U.S. dollar is reasserting its status as the world's reserve currency as growth slows in Europe and investors seek a haven from plunging stock and bond prices in emerging markets. The currency soared to a two-year high versus the euro yesterday, while South Korea's won fell to its lowest in more than a decade today as the nation's shares extended declines.
''The U.S. dollar continued to pressure gold,'' Wallace Ng, precious metals trader at Fortis Bank in Asia Pacific, said today by phone from Hong Kong. ''It's still too early to talk about any rally for gold yet and bullion will continue to trade in a volatile way between the $680 and $740 range.''
Bullion for immediate delivery traded 0.7% lower at $725.60 an ounce at 10:24 a.m. in Singapore. Silver for immediate delivery jumped 1.7% to $9.2150 an ounce.
The ICE futures exchange's dollar index is near its highest since April 2006. The measure, based on a basket of six major currencies, has gained 21% the past three months.
Still, a rally in base metals yesterday and some physical buying interest from Asia has limited the ''downside'' in gold, Fortis Bank's Ng said.
''Physical demand in some Asian countries such as Vietnam is still quite good, as investors think the banking system is not safe,'' he added.
December-delivery gold fell 2.3% to $US726.00 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange. Gold for December delivery in Shanghai rose 0.9% to 157.98 yuan a gram ($US717 an ounce).
Gold for August delivery advanced 2.9% to 2,171 yen a gram ($US724 an ounce) on the Tokyo Commodity Exchange.
