BD: Gold drops in Asia after biggest gain in seven weeks
Gold declined in Asia after its biggest rally in seven weeks as the US dollar's gains against the euro and crude oil's retreat reduced the appeal of bullion as an alternative asset.
The dollar rose to $US1.29 against the euro in Singapore after yesterday falling by the most since the 15-nation currency's 1999 debut as a thaw in money markets reduced demand for the safety of US assets. Crude oil fell by 1.1% after rising more than $US6 a barrel yesterday.
``Data readings should support the dollar against the euro, because on a relative basis, the economic outlook appears dire to Europe too,'' Walter de Wet, commodities researcher at Standard Bank Group in Johannesburg, said in a report yesterday.
Bullion for immediate delivery fell as much as 0.9%, or $US6.53, to $US756.72 an ounce today, before trading at $US757.95 at 9:43am in Singapore. Silver for immediate delivery was down 0.3% at $US10.185 an ounce.
Speculation that Democratic candidate, Senator Barack Obama, who leads U.S. election national polls, will win against Republican John McCain helped send the dollar lower and lifted commodity and equity markets yesterday.
Obama has called for a second economic stimulus package valued at $US175 billion to help revive U.S. growth.
''With Obama, there's this idea that there will be more domestic spending, which may push down the value of the dollar and be good for commodity prices,'' said Michael Gross, an analyst at OptionSellers.com in Tampa, Florida.
December-delivery gold was little changed at $US757.40 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.
Gold for October delivery in Tokyo rallied 4.7% at 2,422 yen a gram ($US757 an ounce) at 10:24am local time.
