MW:Old futures drop on firm dollar, China concerns
By Sara Sjolin, MarketWatch
LONDON (MarketWatch) — Gold futures retreated in electronic trade Monday, as a firmer dollar added selling pressure on the metal while growth concerns in China weighed on the wider metals complex.
Gold for August delivery GCQ2 -0.46% slid $6.60, or 0.4%, to 1,585.50 an ounce during European trading hours, partly erasing a 0.8% gain from last week.
On Friday, the yellow metal climbed 1.7%, as Chinese economic growth for the second quarter was in line with market expectations, calming investor fears that the world’s second-largest economy was slowing at a faster rate than had been forecast.
Over the weekend, though, Chinese Premier Wen Jiabao said that the economic rebound in his country isn’t stable yet and that hardship may continue for a while, according to a state-media report. The comments sparked a selloff in relatively riskier assets such as equities, while the safe-haven dollar moved higher.
The ICE dollar index DXY +0.35% , which measures the U.S. currency against a basket of six rival currencies, rose to 83.622 from 83.324 in late North American trade.
News out of India, one of the largest gold-consuming nations in the world, further caught investor attention. Inflation in the country dropped to 7.25% in June, which could give the Indian central bank scope to lower interest rates at its next meeting, potentially fueling demand for gold, analysts at Commerzbank said in a note.
“That said, the World Gold Council (WGC) assumes that Indian gold demand this year will be down for the second year in a row. According to the WGC, Indians are generally cutting their spending and preserving their liquidity in view of the economic cooldown and the uncertain prospects for the future,” the analysts said. “What is more, there is less money available for buying gold as a result of a poorer than expected monsoon season.”
Elsewhere in the wider metal complex, high-grade copper for September delivery HGU2 -0.80% shed 0.7% to $3.48 a pound, while silver for the same month SIU2 -1.06% gave up 0.8% to $27.15 an ounce.
October platinum PLV2 -0.75% slipped 0.7% to $1,425.50 an ounce, while PAU2 -1.01% palladium for September delivery slid 0.8% to $581.00 an ounce.
Sara Sjolin is a MarketWatch reporter, based in London.
