BS: Gold Falls as Dollar’s Advance May Curb Demand From Investors
By Claudia Carpenter
April 26 (Bloomberg) -- Gold fell from a one-week high in London as the dollar’s advance against the euro may curb demand from investors seeking an alternative investment.
The dollar extended gains against the euro as Greece moved toward getting an emergency aid package before debts come due next month. The metal priced in euros and Swiss francs earlier climbed to records. Gold priced in dollars last year moved inversely to the U.S. currency.
“The market is confused whether to follow the euro or the dollar,” said Bernard Sin, head of currency and metals trading at bullion refiner MKS Finance SA in Geneva. “If the dollar is strong, then naturally gold should go lower.”
Gold for immediate delivery dropped $1.35, or 0.1 percent, to $1,156.25 an ounce at 9:44 a.m. local time, after earlier trading at $1,160.10, the highest price since April 16.
Bullion futures for June delivery climbed 0.2 percent to $1,156.40 on the Comex in New York.
“The market is quite balanced in a range between $1,130 and $1,160 for now,” said Ellison Chu, a manager at Standard Bank Asia Ltd. in Hong Kong. “In the longer term, we expect gold to move higher, because I’m still bearish on the dollar.”
The Federal Open Market Committee of the Federal Reserve in two days may keep the benchmark interest rate unchanged, economists said. The Fed has kept rates at zero to 0.25 percent since December 2008, helping send the dollar down and gold in dollars to a record in December.
Retail Demand ‘Good’
“European retail demand for gold is good,” Sin said. “As we move into the meeting of the FOMC later in the week, that will give the market a bit more sense of the bullishness toward gold against dollars.”
Greece needs to repay 8.5 billion euros ($11.3 billion) of bonds by May 19. Finance Minister George Papaconstantinou, talking to reporters in Washington as he negotiated a three-year loan with the International Monetary Fund and European governments, said that money will be available “rather soon.”
Gold may remain little changed “until the European debt issues find greater clarity,” Hussein Allidina, head of commodity research at Morgan Stanley in New York, wrote in a report yesterday. “We continue to favor exposure to platinum and palladium over gold and silver,” Allidina said.
Platinum gained 0.5 percent to $1,750.55 an ounce and palladium climbed 1.3 percent to $570.40 an ounce. Silver rose 0.4 percent to $18.4025 an ounce.
The outlook for precious metals is “moderately positive,” Credit Suisse Group AG said in a report today. “While we think that platinum should continue to benefit from rising industrial production, we expect gold and silver prices to climb only slightly,” said Eliane Tanner, a commodity analyst.
--Editors: John Deane, Tony Barrett.
To contact the reporters on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net; Kyoungwha Kim in Singapore at Kkim19@bloomberg.net.
To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net.
