LONDON: Gold fell on Monday as news that the US authorities have charged Goldman Sachs with fraud hurt commodities but lifted the dollar, though it recovered from two-week lows as some investors sought the metal as a haven.
Goldman Sachs was charged on Friday with fraud by the US Securities and Exchange Commission over its marketing of a subprime mortgage product, sparking an immediate slide in assets seen as higher risk, like equities and commodities.
Spot gold hit a low of $1,123.15 and was bid at $1,129.55 an ounce at 1212 GMT, against $1,136.45 late in New York on Friday.
Commodities tumbled across the board on Friday after the news, and most are extending those losses on Monday, with oil falling more than 2 per cent and copper sliding to three-week lows.
"There are concerns about Goldman Sachs," said Citigroup analyst David Thurtell. "There was a bit of a rush for the exits...people with long positions who are watching their profits disappear just want to get out and reassess."
Gold specifically might be expected to take some support from the sharp drop in risk appetite, he said. "Gold is a safe haven," he added. "It did fall $20-30, but it has held up relatively well."
US gold futures for June delivery on the COMEX division of the New York Mercantile Exchange fell $6.70 to $1,130.20 an ounce.
Currency effects also weighed on gold, as the dollar strengthened broadly. Rising risk aversion weighed on higher yielding currencies like the euro, with lingering concerns over Greece's debt levels also pressuring the single currency.
Strength in the US unit curbs gold's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
"In the near term, we expect the developments surrounding Goldman to overshadow all other issues that previously dominated gold trading, including the pace and tempo of the economic recovery and its impact on monetary policy (and) the possibility of a CNY revaluation," said HSBC in a note.
