MW: Gold falls as dollar rises against euro, sterling
By Moming Zhou, MarketWatch
NEW YORK (MarketWatch) -- Gold futures fell Wednesday to their lowest level in nearly two weeks, as the U.S. dollar rose against its major rivals, reducing the metal's appeal as an alternative investment.
Gold for February delivery, the most active contract, fell $16.30, or 2.1%, to $767 an ounce on the Comex division of the New York Mercantile Exchange. It dropped to $765.10 in overnight electronic trading, the lowest since Nov. 21.
The front-month December contract, which expires on Dec. 29, fell to as low as $764.40 an ounce. Open interest, or the number of outstanding contracts, of the December contract stood at 2,581, or 258,100 ounces, according to Comex data. Open interest of the February contract was at 16,269,800 ounces.
Gold inventories held by the Comex for futures delivery stood at 2,908,224 ounces as of Monday, down 7,202 ounces from a day ago, according to latest data from the exchange.
The dollar strengthened against the euro and the British pound on expectations for big rate cuts by the European Central Bank and the Bank of England on Thursday. See Currencies.
"There remained a general lack of buying interest [for gold] ahead of key rate decisions from the BoE and the ECB," said analysts at Action Economics.
"In general, the outlook for commodities is poor due to expectations of a long and protracted global recession," they added. "However, gold may be protected from some of the fallout due to safe haven demand on dips."
Purchasing managers indexes for the 15-nation euro zone and Great Britain indicated a sharp decline in activity in the services sectors, underlining expectations the central banks will take aggressive action. See full story.
The greenback, however, was weakening against the Japanese yen. Meanwhile, strength against the European currencies could be short-lived, analysts said, as the Federal Reserve is expected to cut its key interest rate later this month.
In gold spot trading, the London gold-fixing price -- used as a benchmark for gold for immediate delivery -- stood at $773.50 an ounce Wednesday morning, down $6.50 from Tuesday afternoon.
Holdings in the SPDR Gold Trust, the largest gold exchange-traded fund, stood at 758.12 tons on Tuesday, unchanged a third session, according to the latest data from the fund. The SPDR Gold Trust fell 2% to $75.47.
In other metals, March silver futures fell 1.8% to $9.445 an ounce. January platinum added 0.3% to 810 an ounce and March palladium dropped 0.7% to $172.50 an ounce.
March copper dropped 3.3% to $1.547 a pound.
On the equities side, the Amex Gold Bugs Index which tracks the share prices of major gold companies, dropped 4.4% to 215.76.
The iShares Gold Trust exchange-traded fund slid 2.3% to $75.30, while the iShares Silver Trust ETF ) lost 1.6% to $9.35. The Market Vectors-Gold Miners ETF fell 3% to $23.94.
