BLBG: Gold Falls in London as Oil Declines, Dollar May Strengthen
Gold fell in London as oil prices declined and on expectations the dollar will strengthen, reducing the metal’s appeal as an alternative investment and hedge against inflation.
Gold has added 2.2 percent in London this month, while the dollar has declined 6.2 percent against a basket of six major currencies. Oil slipped 30 percent in the period. The U.S. Energy Department will today say crude-oil stockpiles probably increased by 500,000 barrels in the week ended Dec. 19, according to a Bloomberg survey.
“Technical momentum signals,” used by some investors to forecast price changes, indicate the dollar may strengthen and oil prices may decline, Manqoba Madinane, a commodity analyst at Standard Bank Group Ltd. in Johannesburg, wrote in a report. With the expected increase in oil inventories “this should put further weight on precious metal investment sentiment,” he said.
Gold for immediate delivery lost $4.20, or 0.5 percent, to $836 an ounce by 10:54 a.m. in London. February futures fell $1.70, or 0.2 percent, to $836.40 in electronic trading on the Comex division of the New York Mercantile Exchange.
The metal declined to $836.75 in the morning “fixing” in London, used by some mining companies to sell production, from $843.50 at the afternoon fixing yesterday. Gold reached a record $1,032.70 in March and is little changed this year.
“Given the early closes, conditions are likely to remain very thin today,” said James Moore, an analyst at TheBullionDesk.com in London, referring to the year-end holidays. “The market is likely to remain vulnerable to pockets of cash generating year-end liquidation.”
Gold Supply
Global gold supply may drop 15 percent in the next five years because of a lack of mining investment, the U.K.’s Financial Times reported, citing Randgold Resources Ltd. Chief Executive Officer Mark Bristow. Bristow couldn’t immediately be reached for comment.
KazakhGold Group Ltd. today said full-year output will be “materially lower” than a year earlier because of “inadequate” access to capital.
Among other metals for immediate delivery in London, silver gained 1.2 percent to $10.37 an ounce. Platinum rose $7.50, or 0.9 percent, to $852 an ounce, and palladium was 0.1 percent higher at $173.25 an ounce.
