SF: Gold May Decline on Rally to Six-Week High, Stronger Dollar
Aug. 18 (Bloomberg) -- Gold, little changed in London today, may decline as bullion's rally to a six-week high and a stronger dollar prompt some investors to sell the metal.
The dollar gained against the euro amid speculation the economy may be slowing enough for the Federal Reserve to increase bond purchases. Gold, which usually moves inversely to the greenback, reached $1,229.07 an ounce yesterday, the highest price since July 1.
"The euro trading weaker against the dollar is weighing on gold," Peter Fertig, owner of Quantitative Commodity Research Ltd. in Hainburg, Germany, said today by phone. "The recent rise of gold could be a bit overdone."
Immediate-delivery bullion lost $2.42, or 0.2 percent, to $1,222.43 an ounce at 9:06 a.m. in London. The metal for December delivery was 0.3 percent lower at $1,224.40 on the Comex in New York.
The metal gained 5.4 percent in the three weeks to yesterday as concern deepened that the global recovery may falter. Gold has rallied 11 percent this year, reaching an all- time high of $1,265.30 an ounce in June, as the prospect of currency debasement prompted investors to seek a refuge. The precious metal is on course for a 10th annual gain.
"We could see profit-taking by short-term-oriented market players, which should prevent a further sharp rise in gold," Eugen Weinberg, head of commodity research at Commerzbank AG, wrote in a report.
Platinum, Palladium Slip
Bullion gained for a second week last week as the Fed said economic growth is slowing and it will revive its Treasury purchases. The central bank plans to buy Treasuries due from August 2016 to August 2020 tomorrow, after purchasing $2.551 billion of securities yesterday. The Fed may have to buy more assets if inflation keeps slowing, James Bullard, president of the Fed Bank of St. Louis, said yesterday in an article in the Wall Street Journal.
Assets in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, rose 7.91 metric tons to 1,294.6 tons yesterday, the company's website showed. Holdings reached an all-time high of 1,320.44 tons in June.
Silver for immediate delivery in London lost 0.3 percent to $18.4575 an ounce. Platinum fell 0.3 percent to $1,539.40 an ounce. Palladium declined 0.3 percent to $494.45 an ounce.
