MW: Gold slips from two-month highs as dollar firms
By Nick Godt, MarketWatch
NEW YORK (MarketWatch) -- Gold futures fell from their highest levels in two months on Wednesday as an outlook from consumer-products giant Procter & Gamble and economic reports -- a survey of private-sector employment and an index of service-sector conditions -- disappointed investors, lifting the U.S. dollar.
August gold futures fell $6.50, or 0.7%, to $961.00 an ounce in early North American electronic trading. The more active December contract fell $1.04 to $962.10.
Among other metals, silver for September delivery fell 0.5% to $14.63 an ounce, while copper for September delivery rose 0.4% to $2.81 a pound.
The dollar index (DXY 77.77, +0.01, +0.01%) , which measures the U.S. unit against a basket of six major currencies, stood at 77.785, little changed from Tuesday, but the dollar advanced against the euro and the yen.
The U.S. currency, along with the yen and other low-yielding currencies, has been used as a safe haven since the financial crisis, falling on good news and rising on bad news. A firmer dollar tends to pressure dollar-denominated currencies, as it makes them cheaper for holders of other currencies.
U.S. private-sector employment fell by an estimated 371,000 jobs in the July ADP employment index, the smallest decline since October. See full story.
Separately, the Institute for Supply Management said its index on the services sector fell to 46.4 in July. Economists surveyed by MarketWatch expected the index to rise to 48 from 47, with readings below 50 indicating contraction. See full story.
Some analysts believe the dollar, which is trading near its lows of the year, will fall further, while gold has strong support near current levels.
"$960 an ounce had proved to be a very strong level of resistance as investors doubted whether gold could sustain itself above that in the short term," said analysts at the London-based firm Bullion Desk. "With the dollar under increasing pressure a series of closes above $960 an ounce should see gold pushing to fresh highs."
Speculators in the crosshairs
In Washington, D.C., the Commodity Futures Trading Commission is holding the last of three hearings on commodities speculation on Wednesday.
Among those scheduled to testify is John Hyland, chief investment officer of U.S. Commodity Funds, the Alameda, Calif.-based fund manager that runs the $2.5 billion United States Oil Fund (USO 37.54, -0.43, -1.13%) and $4.5 billion United States Natural Gas Fund (UNG 14.11, +0.36, +2.62%) . Read more.
On Tuesday, gold futures rose for a fourth session to their highest level in two months, as the dollar neared at 10-month low and as a consultancy forecast that global central banks will sell the lowest amount of gold in 15 years this year.
GFMS of London said Monday that signatories of the Central Bank Gold Agreement are expected to sell about 140 metric tons this year, the lowest level since 1994. The firm also said last week that second-quarter supply of scrap gold plummeted by more than 40% from the previous quarter to 350 metric tons.
