Gold fell for the first day in five in Asia as a pause in the dollar’s decline damped demand for the precious metal as a haven investment.
Bullion, which typically moves inversely to the US currency, has dropped 4.3 per cent this month as the Dollar Index, a measure of the greenback’s value against six major trading partners, climbed 0.8 per cent. The dollar traded little changed against the euro after dropping close to a two-week low as China repeated its call for a new global currency.
"The prospect for higher gold prices rests with investor attitudes and these in turn are likely to be guided by expectations for the dollar’s outlook and the need to hedge against economic and financial risk," Societe Generale SA analysts led by Frederic Lasserre said in a quarterly report.
Gold for immediate delivery dropped as much as 0.5 per cent to $US935.20 an ounce and traded at $US937.68 an ounce in Singapore this morning. Still, the metal is headed for a third straight quarterly increase on longer-term inflationary expectations.
"With a ballooning US budget deficit there is an argument for higher gold prices in the medium term, although in the coming weeks, with the commodities sector somewhat strained, the price may remain under pressure," said Lasserre.
Thirteen of 23 traders, investors and analysts surveyed by Bloomberg News, or 57 percent, said bullion would gain this week on speculation record low U.S. interest rates will increase demand for alternative investments. Four people forecast lower prices and six were neutral.
Among other precious metals for immediate delivery, silver fell 0.9 per cent to $US13.955 an ounce, platinum was down 0.6 per cent at $US1194 an ounce and palladium was down 0.2 per cent at $245.50 an ounce.
