MW: Gold falls to three-week low as dollar rises; silver also down
NEW YORK (MarketWatch) -- Gold futures fell Monday to the lowest level in more than three weeks as vocal support from Russia for the dollar lifted the U.S. currency against major rivals, reducing the precious metal's investment appeal.
Speaking to reporters on the sidelines of the Group of Eight meeting in Lecce, Italy, Russian Finance Minister Alexei Kudrin said there was no near-term alternative to the dollar as the world's leading reserve currency, news reports said.
The greenback strengthened after the remarks. A stronger dollar tends to push dollar-denominated gold prices lower.
On the Comex division of the New York Mercantile Exchange, August gold fell $6.90, or 0.7%, to $933.80 an ounce. It dropped as low as $931.20, the weakest level since May 20.
"Stronger dollar sentiment has put gold under further pressure," said James Moore, an analyst at TheBullionDesk.com, in a note. "Short-term the metal could extend lower as a result of the dollar."
"However the current correction is likely to prove beneficial longer-term with the pullback offering investors a chance to enter the market," he added.
Kudrin's remarks seemed to point to a concerted effort by Russia, China and other major holders of dollar reserves to shift away from talk that could weaken the dollar -- and the value of their holdings, strategists said. See Currencies.
The stronger dollar also weighed on other metals. July silver lost 51.5 cents, or 3.5%, to $14.36 an ounce, July platinum lost $20.90, or 1.7%, to $1,237.80 an ounce, while September palladium fell $4.10, or 1.6%, to $250 an ounce.
Copper also moved lower, with the July contract down 4.15 cents, or 1.8%, at $2.332 a pound.
London inventories fell to 290,275 metric tons as of Friday, down by 2,900 metric tons from the previous session, exchange data showed.
In exchange-traded funds action, holdings in the SPDR Gold Trust (GLD 91.87, -0.30, -0.33%) , the biggest exchange-traded fund backed by gold, stood at 1,132.15 metric tons on Friday, unchanged for a sixth session, according to the latest data from the fund.
Holdings in the iShare Silver Trust (SLV 14.19, -0.44, -3.01%) , the biggest silver ETF, stood at 8,605.43 metric tons on Friday, unchanged from the previous session.
