BLBG: Gold Futures Fluctuate in New York on Outlook for Dollar
By Pham-Duy Nguyen and Nicholas Larkin
Aug. 5 (Bloomberg) -- Gold prices fluctuated on speculation that a weakening dollar will spur demand for the metal as an alternative investment.
The dollar fell as much as 0.4 percent before paring losses against a basket of six major currencies. The euro approached a three-month high against the dollar as the European Central Bank held its main interest rate steady. Gold reached a record $1,266.50 an ounce on June 21.
“Gold is stepping back into the spotlight as the dollar continues to slide lower,” said Matt Zeman, a metals trader at LaSalle Futures Group in Chicago. “Gold is a dollar trade now. Look for prices to go higher if the dollar weakens. If we see a stronger dollar, gold will have a difficult time.”
Gold futures for December delivery were unchanged at $1,195.90 an ounce at 10:12 a.m. the Comex in New York. The metal is up 24 percent in the past year and headed for its seventh straight gain, the longest advance since November.
“We are seeing resurgent interest from the investor community,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. Prices have been “benefiting from a tumbling dollar and a rebound in riskier assets.”
The ECB’s main rate is at 1 percent. The U.S. Federal Reserve has kept the benchmark lending rate between zero and 0.25 percent since December 2008 to spur growth.
“Obviously, the Fed can’t lower interest rates lower than zero,” said Zeman. “That’s going to continue to weaken the dollar and give the metal a boost.”
Access to Trading
China, the world’s biggest gold producer and second-largest buyer after India, said on Aug. 3 that it would let more banks import and export bullion and allow foreign companies more access to trading.
Silver futures for September delivery rose 7.2 cents, or 0.4 percent, to $18.35 an ounce on the Comex.
Platinum futures for October delivery fell $15, or 0.9 percent, to $1,586.20 an ounce on the New York Mercantile Exchange. Palladium futures for September delivery lost $7.40, or 1.5 percent, to $492.75 an ounce.
To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.
