LONDON — Gold slipped in Europe on Monday, pressured by gains in the U.S. dollar as investors bought the currency as a safe store of value amid fears over the outlook for the global economy.
A slide in oil and other commodity prices was also keeping bullion under pressure, analysts said.
Spot gold was bid at $922.90 an ounce at 0905 GMT, against $932.30 an ounce late in New York on Friday. U.S. gold futures for August delivery on the COMEX division of the New York Mercantile Exchange fell $7.90 to $923.10 an ounce.
“The euro is a bit weaker (versus the dollar) and oil is going down quite sharply,” said Afshin Nabavi, head of trading at MKS Finance in Geneva. “Though we haven't broken out of our range, $920 is a very important level.”
Investor confidence has been subdued since weaker than expected jobs data from the United States last week. While gold also often benefits from uncertainty in the wider markets, it is currently taking its cues chiefly from the dollar.
Bullion is often bought as an alternative asset to the U.S. currency and moves in the opposite direction to it. Traders are awaiting fresh direction from the outcome of the G8 meeting later in the week.
“It seems like gold will continue to trade in the range with a negative tone, and rallies might still be used as fresh selling opportunities,” said Pradeep Unni, senior trader at Richcomm Global Services.
“The market will certainly be cautious ahead of the G8, (and) that nervousness could further limit the metal in the range,” he added. “It's ideal to be on the selling side, and the slide in oil prices may keep the prices subdued.”
Oil slipped more than 4 per cent to a five-week low above $64 a barrel on Monday, pressured by doubts over the prospects for an economic recovery and the stronger dollar.
Other industrial commodities such as copper and aluminium also posted losses.
Elsewhere, the Bombay Bullion Association said demand for gold and silver from India, the world's biggest bullion consumer, is likely to be pressured further this year by an increase in import duty in the budget for 2009/10.
“As it is business was bad,” said the association's head Suresh Hundia. “This will make it worse.” Indian gold imports tailed off last year as prices rose.
Bargain hunters emerged in India as prices fell on Monday, but other Asian buyers are awaiting a further price correction, dealers said.
Among other precious metals, silver was at $13.12 an ounce against $13.39, tracking gold lower.
“Interestingly, the gold to silver ratio surged higher in the past week, pushing above 69 on Friday,” said VTB Capital analyst Andrey Kryuchenkov in a note.
“Gold prices were almost unchanged in volatile trading last week. However, silver suffered not only from weakness on the (platinum) market, but also from a slight increase in risk aversion and resurfacing economic concerns.”
