BS : Gold May Fall in London on Dollar Strength, India Rate Increase
By Nicholas Larkin and Kim Kyoungwha
March 22 (Bloomberg) -- Gold, little changed in London, may decline as the dollar continues its advance and India’s interest rate increase dampens investor demand.
The dollar traded near a three-week high against the euro on concern the European Union will fail to agree on an aid package for Greece. Bullion slid 1.8 percent on March 19, the steepest drop since Feb. 4, as the greenback climbed after the Reserve Bank of India unexpectedly raised borrowing costs. Gold typically moves inversely to the U.S. currency.
“Greek debt concerns continue to keep the euro in a weak mood,” James Moore, an analyst at TheBullionDesk.com in London, said in a report. The rate hike by India has also “dented risk appetite,” he said.
Gold for immediate delivery added 10 cents to $1,107.10 an ounce at 9:16 a.m. local time. The metal added 0.5 percent last week. Bullion for April delivery was 0.1 percent lower at $1,106.90 on the Comex in New York.
German Chancellor Angela Merkel told investors that they shouldn’t expect this week’s EU summit to agree on any aid package for Greece. Her remarks came after Greek Prime Minister George Papandreou and European Commission President Jose Barroso said the EU should spell out its rescue plan at the March 25-26 summit in Brussels.
The Reserve Bank of India increased the benchmark reverse- repurchase rate to 3.5 percent from a record-low 3.25 percent last week, fueling speculation other nations may do the same and demand for commodities will ease.
‘Under Pressure’
“With interest rates being tightened in India and the dollar rising, gold is likely to remain under pressure,” said Yu Kyung Kyu, a Seoul-based trader with Eugene Investment & Futures Co.
Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, were unchanged for a seventh day at 1,115.51 metric tons on March 19, its Web site showed.
Among metals for immediate delivery in London, silver was little changed at $16.9775 an ounce. Platinum lost 0.6 percent to $1,596.75 an ounce and palladium was 0.6 percent lower at $464 an ounce.
--Editors: John Deane, Stuart Wallace.
To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Kyoungwha Kim in Singapore at Kkim19@bloomberg.net.
