BLBG: Gold May Drop as Gain to Highest Since June 12 Seen as Overdone
By Kim Kyoungwha
July 24 (Bloomberg) -- Gold, little changed in Asian trade, may decline on speculation that a recent rise to the highest in almost six weeks was overdone.
Bullion climbed as much as 0.7 percent to $957.55 an ounce yesterday, the highest since June 12, as the dollar dropped against the euro and signs of an economic rebound revived investor demand for higher-yielding assets.
“There might be some selling after a recent good run,” said Park Jong Beom, a Seoul-based trader with Tongyang Futures Co. The metal is on course for a second weekly advance, taking this year’s gains to about 7.6 percent.
Gold for immediate delivery traded at $948.92 an ounce at 1:20 p.m. in Singapore, 23 cents lower than yesterday’s close, after dropping as low as $947.12. The metal is up 1.2 percent this week. The Dollar Index, a six-currency gauge of the greenback’s value, fell 0.5 percent, trading near the lowest since June 3.
Bullion rose this week amid signs of a global recovery. U.S. home resales climbed for a third month, the National Association of Realtors said yesterday. South Korea’s economy grew 2.3 percent in the three months through June, from the first quarter, the central bank said today, helping to send the MSCI Asia Pacific Index of regional shares rising for a ninth day.
“If macro economic conditions continue to improve, the U.S. dollar could depreciate a little further based on increased risk appetite from investors which will put upward pressure on gold,” said Ben Westmore, an analyst with National Australia Bank.
Dollar Alternative
The metal may gain next week as investors seek an alternative to a weakening dollar, a survey showed.
Fourteen of 24 traders, investors and analysts surveyed by Bloomberg News, or 58 percent, said bullion would rise. Six forecast lower prices and four were neutral.
Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, were unchanged at 1,086.61 metric tons as of July 23, according to the company’s Web site.
Among other precious metals for immediate delivery, silver was down 0.1 percent at $13.71 an ounce, platinum dropped 0.4 percent to $1,174.25 an ounce and palladium fell 0.1 percent to $258.23 an ounce.
To contact the reporter on this story: Kyoungwha Kim in Singapore at Kkim19@bloomberg.net
