BLBG:Gold To Fall As Stronger Dollar Curbs Investment Demand
Gold was set to decline for the first time in four days in London as a stronger dollar cuts demand for the metal as an alternative investment and before European Central Bank policy makers meet.
The dollar rose for a second day versus the euro before the ECB meets tomorrow to discuss measures to tackle the region’s debt crisis. President Mario Draghi told lawmakers in a closed- door session in Brussels this week the bank’s primary mandate compels it to intervene in bond markets to ensure the euro’s survival. Gold reached $1,699.05 an ounce yesterday, the highest since March 13.
“For a sustained push above $1,700 and beyond we need further losses in the dollar,” Andrey Kryuchenkov, an analyst at VTB Capital in London, wrote today in a report. Investors are “still reluctant to position themselves and commit to substantial longs ahead of the ECB policy announcement,” he said, referring to bets on higher prices.
Immediate-delivery bullion fell 0.3 percent to $1,690.75 an ounce by 11:09 a.m. in London. December-delivery futures were 0.2 percent lower at $1,693.20 on the Comex in New York.
Gold at the morning “fixing,” used by some mining companies to sell output, declined to $1,689.50 in London from $1,697 yesterday afternoon.
Bullion’s 14-day relative-strength index was at 70.3 today, above a level of 70 that indicates to some analysts who study such charts that a drop in prices may be imminent. Holdings in gold-backed exchange-traded products gained 7.9 metric tons to a record 2,467.8 tons yesterday, data compiled by Bloomberg show.
Gold is set to climb above $1,800 by the end of this year as central banks’ actions to stoke economic growth boost investment to a record in the second half, Thomson Reuters GFMS said in a report yesterday. Bloomberg competes with Thomson Reuters in selling financial and legal information and trading systems.
Silver for immediate delivery fell 0.6 percent to $32.155 an ounce after reaching $32.425 yesterday, the highest level since April 13. Platinum was 0.4 percent lower at $1,563.74 an ounce after climbing to a four-month high of $1,570.75 yesterday. Palladium was little changed at $641 an ounce.
To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net
