BLBG: Gold Drops to 3-Week Low in London as Dollar Rally Curbs Demand
Gold dropped to a three-week low in London as a stronger dollar eroded demand for the metal as an alternative investment. Other precious metals also fell.
The U.S. Dollar Index, a six-currency gauge of the greenback’s value, gained after Russian Finance Minister Alexei Kudrin said the nation had full confidence in the U.S. currency. Gold, which typically moves inversely to the dollar, has slipped 4.3 percent this month as the dollar index added 2.1 percent.
“Stronger dollar sentiment has put gold under further pressure,” James Moore, an analyst at TheBullionDesk.com in London, said today in a note. “The metal could extend lower as a result.”
Bullion for immediate delivery lost as much as $8.33, or 0.9 percent, to $930.97 an ounce, the lowest since May 20. The metal traded at $933.61 at 11:04 a.m. in London. August gold futures slipped 0.7 percent to $934.10 an ounce on the New York Mercantile Exchange’s Comex division.
The metal declined to $932 in the morning “fixing” in London, used by some mining companies to sell production, from $937.25 at the afternoon fixing on June 12. Gold declined for a second week last week, slipping 1.7 percent.
Twelve of 29 traders, investors and analysts surveyed by Bloomberg News, or 41 percent, said gold would drop this week. Eleven forecast higher prices and six were neutral.
Physical Demand
“We would not be surprised to see further short-term declines especially in the absence of any material jewelry, physical investment or ETF demand,” John Reade, UBS AG’s head metals strategist in London, said today in a report.
Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, has remained unchanged at 1,132.15 metric tons since June 5, the company’s Web site showed. Gold held in ETF Securities Ltd.’s exchange-traded commodities rose to a record 7.681 million ounces on June 12, from 7.671 million ounces the day before, its Web site showed.
Gold will average $952 an ounce this year, 2.7 percent more than previously estimated, Macquarie Group Ltd. said in a report dated today.
Silver for immediate delivery in London lost as much as 3.6 percent to $14.3050 an ounce, the lowest since May 26. It last traded at $14.39 an ounce. Platinum fell 2.1 percent to $1,228 an ounce, and palladium was 2.3 percent lower at $247.65 an ounce.
