MW: Gold falls for second day as oil declines, dollar strengthens
By Polya Lesova & Moming Zhou, MarketWatch
NEW YORK (MarketWatch) -- Gold futures fell Wednesday for a second session, as a stronger dollar and declining oil prices continued to reduce the metal's appeal as a hedge against a weaker currency and potential inflation.
Gold for August delivery slipped $8.30, or 0.9%, to $930.80 an ounce on the Comex division of the New York Mercantile Exchange. The contract hit an intraday low of $929.70 an ounce.
"The clouded financial markets sentiment did not leave the gold price unscathed," wrote analysts at Commerzbank in a note to clients. It has dropped "owing to the firmer U.S. dollar."
"Gold is not behaving like a safe haven currently, but rather moves in line with riskier asset classes such as equities and crude oil," the analysts said.
Gold prices have fallen nearly 2% this week, pacing losses in stocks and other commodities.
In the currency markets, the U.S. dollar surged against most of its major rivals, boosted by safe-haven flows as U.S. equities fell sharply. See Currencies.
The dollar index (DXY 79.15, +0.30, +0.37%) , which tracks the greenback against a trade-weighted basket of six major currencies, rose to 79.171, up from 78.863 in North American action late Tuesday. See Currencies.
GLD 91.34, -0.77, -0.83%
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Dollar strength tends to weigh on dollar-denominated commodities such as gold and oil because it makes them more expensive for holders of other currencies.
Also weighing on gold, holdings in the biggest gold exchange-traded fund fell again, indicating weak investment demand for the metal.
Holdings in SPDR Gold Trust (GLD 91.34, -0.77, -0.83%) , the biggest exchange-traded fund backed by gold, fell to 1,083.25 metric tons Tuesday, down 3.36 metric tons from a day ago, according to latest data from the fund. Holdings have dropped more than 40 metric tons in one month.
"Given the recent build in speculative longs and ETF redemptions yesterday, combined with very limited physical interest, gold remains vulnerable to a deeper correction and could test back to the $920/$905 support area," said James Moore, analyst at TheBullionDesk.com in a note to clients.
Oil futures fell 3% Wednesday after equities in Shanghai plunged and an industry group reported a surge in crude supplies. See Futures Movers.
In economic news, the Commerce Department reported June durable goods order fell by 2.5% on weaker demand for autos, airplanes, and computers.
Among other metals, copper for September delivery fell 4 cents, or 2%, to $2.48 a pound. Silver for September delivery dropped 26 cents, or 2%, to $13.48 an ounce.
October platinum fell $27.60, or 2.3%, to $1,169 an ounce, while the September palladium contract fell $5.35, or 2.1%, to $254.65 an ounce.
