RTRS: Gold hits six-week low as dollar extends gains
(Reuters) - Gold slid to a six-week low on Wednesday as the dollar rose more than 1 percent versus the euro, with a ratings downgrade of Portugal and persistent worries over debt-laden Greece weighing on the single currency.
The dollar also took support from data showing new orders for long-lasting U.S. manufactured goods rose for the third straight month in February.
Spot gold fell as low as $1,088.05 an ounce, its weakest since February 12, and was bid at $1,089.60 an ounce at 1258 GMT (8:58 a.m. EDT), against $1,101.65 late in New York on Tuesday.
The euro slid to its lowest since early May last year against the dollar as investors flocked to the perceived safety of the U.S. currency on concerns over the euro zone.
It came under fresh selling pressure after Fitch Ratings lowered Portugal's sovereign credit rating to AA- from AA, with a negative outlook.
"The Fitch downgrade of Portugal didn't help matters for the euro," said VTB Capital analyst Andrey Kryuchenkov. "That was another addition to already negative sentiment, another kick to the euro."
"Gold is trading completely against the dollar at the moment," he added.
U.S. gold futures for April delivery on the COMEX division of the New York Mercantile Exchange fell $14.00 to $1,089.70 an ounce.
The euro's move comes ahead of a European Union summit later this week, and after Germany signaled it may accept European financial aid for Greece as a last resort.
Uncertainty over Greece is likely to continue to weigh on the euro, Credit Agricole said in a note.
"It looks unlikely that the summit will generate any concrete EU plans that will sufficiently assuage market nerves," it said.
"Instead it seems that the Germans and the French, if speculation is to be believed, both agree that the IMF should be involved in any support."
OIL SLIDES
Gold typically falls as the dollar firms, as strength in the U.S. unit curbs gold's appeal as an alternative asset and makes it more expensive for holders of other currencies. That link weakened earlier this year, but has since been restored.
Among other commodities, oil also fell more than $1 a barrel after a report showed a surge in U.S. crude inventories, fuelling fears about demand recovery from industrialised nations as Europe struggled to manage Greece's debt crisis.
The world's largest gold-backed exchange-traded fund, New York's SPDR Gold Trust, said its holdings rose 4.6 tonnes on Tuesday to 1,120.079 tonnes, their highest since January 7.
"The increase in ETF holdings yesterday is encouraging, as is the scale of buying around and below $1,100, and suggests further pockets of investment diversification will continue to underpin prices," said TheBullionDesk.com analyst James Moore.
Silver was bid at $16.62 an ounce against $16.97, tracking losses in gold, while platinum was at $1,575.50 an ounce against $1,607.
Palladium was the biggest faller among the precious metals, sliding more than 4 percent to a session low of $443.50 an ounce. It was later at $447 against $464.50.
"The stronger dollar is the main reason for the drop," said one platinum group metals trader. "The dollar hasn't been that strong since May last year."
