BLBG:Gold Declines As Stronger Dollar Curbs Investor Demand
Gold declined for the first time in four days in London as a stronger dollar curbed demand for the metal as an alternative investment.
The dollar gained versus the euro as data showed German industrial production declined in June and after Standard & Poor’s revised the outlook on Greece’s sovereign rating to negative from stable. The Bank of Japan (8301) started a two-day policy meeting today amid speculation it may take steps to drive interest rates lower.
“Bullion continues to trade with the single currency with little physical interest,” Andrey Kryuchenkov, an analyst at VTB Capital in London, wrote today in a report. “So far, gold has failed to attract any safe-haven inflows, instead trading as any other risk asset and in line with the broader market sentiment.”
Immediate-delivery bullion fell 0.3 percent to $1,607.05 an ounce by 11:18 a.m. in London. December-delivery futures were 0.2 percent lower at $1,609.90 on the Comex in New York.
Gold at the morning “fixing,” used by some mining companies to sell output, declined to $1,607 an ounce in London from $1,611 yesterday afternoon.
The outlook on Greece’s CCC rating, already eight levels below investment grade, was revised to negative from stable, S&P said yesterday in a statement. The change reflects the risk of a downgrade if Greece is unable to obtain the next disbursement from the European Union and International Monetary Fund rescue package, the ratings company said.
“In the last few months, gold prices have slipped as investors have flocked to the traditional safe-haven assets of U.S. Treasuries and the U.S. dollar in lieu of gold as the European debt crisis has intensified,” Lachlan Shaw, an analyst at Commonwealth Bank of Australia (CBA), wrote in an e-mail today. “However, we believe the hopes of central bank stimulus will keep prices firm.”
Silver for immediate delivery fell 0.8 percent to $27.9225 an ounce. Palladium dropped 0.5 percent to $583.70 an ounce. Platinum was 0.5 percent lower at $1,401.88 an ounce.
To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net
