BLBG: Gold Falls in London as Dollar, Rally to 7-Week High Spur Sales
Gold declined for the first time in seven days in London as a stronger dollar and a climb to a seven-week high prompted sales by some investors. Silver slid from a 30-year high and other precious metals fell.
The U.S. Dollar Index, a six-currency gauge of the greenback’s strength, climbed after the Libyan government attacked protesters and rebels claimed control of the second- biggest city, Benghazi. Gold, which today traded about 1.4 percent from a record, typically moves inversely to the dollar.
“The stronger dollar is pressuring gold prices in the short term,” said Bayram Dincer, an analyst at LGT Capital Management in Pfaeffikon, Switzerland. “We expect gold to trade higher, as geopolitical uncertainties will result in higher gold demand.”
Immediate-delivery bullion fell $11.27, or 0.8 percent, to $1,395.18 an ounce at 10:04 a.m. in London. Prices earlier rose to $1,410.75, the highest level since Jan. 4. The metal for April delivery was 0.4 percent higher at $1,394.70 on the Comex in New York. The Comex price includes trading yesterday, when U.S. markets were closed for Presidents’ Day.
Bullion’s six-day gain was the longest streak since August. Gold reached a record $1,431.25 an ounce on Dec. 7. Concern about rising inflation and currency debasement drove prices up 30 percent last year for a 10th annual gain. Rising food and commodity prices have contributed to uprisings in the Middle East.
Libyan Protests
Libya erupted into violence yesterday when leader Muammar Qaddafi’s son threatened “rivers of blood” and deployed security forces against protesters. The International Federation for Human Rights says more than 300 people have died. The country is the latest in the region to be rocked by protests ignited by last month’s ouster of Tunisia’s president and fanned by the Feb. 11 fall of Egyptian president Hosni Mubarak.
“The desire to take profits grew among short-term investors after gold’s recent rally,” said Lim Chae Myung, Seoul-based trader with Hyundai Futures Co. “Coupled with a stronger dollar, that’s taking some steam out of gold, but I don’t believe this is a trend reversal.”
Silver for immediate delivery in London earlier climbed to $34.3187 an ounce, the highest price since March 1980. It was last down 4.1 percent at $32.49. Palladium slid 2.6 percent to $836.50 an ounce after yesterday reaching $862.25, the highest level since February 2001. Platinum was 1.8 percent lower at $1,817.95 an ounce.
To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Kyoungwha Kim in Singapore at kkim19@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.
