BLBG: Gold Falls for 3rd Day in London on Dollar, Lower Haven Demand
Gold fell for a third day in London as a stronger dollar and U.S. measures to ease the financial crisis eroded demand for the metal as an alternative investment to the U.S. currency and a haven from market turmoil.
The Federal Reserve said yesterday it was prepared to buy Treasury securities to improve credit markets, while the U.S. House passed President Barack Obama’s $819 billion stimulus package, which now moves to the Senate. The dollar rose as much as 1.1 percent against the euro. Bullion typically moves in the opposite direction to the U.S. currency.
“The dollar is a little bit stronger,” pulling gold prices down, said Alex MacKinnon, a trader at ODL Securities Ltd., by phone from London today. “The safe-haven status for gold has come off” the past few days, he said.
Bullion for immediate delivery slipped as much as $12.75, or 1.4 percent, to $874.80 an ounce and traded at $877.86 by 11:17 a.m. in London. April futures fell $10.80, or 1.2 percent, to $879.20 in electronic trading on the Comex division of the New York Mercantile Exchange.
The metal fell to $878.50 an ounce in the morning “fixing” in London, used by some mining companies to sell production, from $895.25 at yesterday’s afternoon fixing. Spot prices are now down 0.2 percent for the year after gaining as much as 3.6 percent.
Gold dropped the most in two weeks yesterday after stocks gained globally as Obama’s administration prepared a plan to set up a so-called bad bank to buy toxic financial assets. The Fed left the target range for the main interest rate unchanged at close to zero and warned of a prolonged global economic slowdown that may push the U.S. to the brink of deflation.
Inflation Hedge
Some investors buy gold as a hedge against inflation. Crude oil fell as much as 2.5 percent to $41.10 a barrel in New York after U.S. crude inventories gained more than expected last week and refiners reduced output as demand declined.
“Inventory data should keep oil prices under pressure, at least in the near term,” Manqoba Madinane, a commodity analyst at Standard Bank Group Ltd. in Johannesburg, wrote in a report. “This could weigh down precious metals.”
Among other metals for immediate delivery in London, silver declined 2.4 percent to $11.72 an ounce. Platinum lost $3.50, or 0.4 percent, to $953 an ounce, and palladium was 0.1 percent higher at $190.75 an ounce.
