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Oil drags gold lower as dollar firms
Gold turned lower yesterday as oil moved into negative territory and dealers shrugged off higher-than-expected US inflation data, which helped support the dollar.
- Reuters
- Published: 23:01 August 14, 2008
London: Gold turned lower yesterday as oil moved into negative territory and dealers shrugged off higher-than-expected US inflation data, which helped support the dollar.
Gold hit $820.40/$821.30 an ounce by 1323 GMT from $825.85/$826.85 late in New York on Wednesday.
In theory, lower oil prices reduce gold's appeal as a hedge against inflation. Falling oil, down 73 cents to $115.28 a barrel, pushed gold into negative terrain.
Earlier in the session, gold rose to an intra-day high of $836.50, up 1.3 percent as oil prices gained.
But the metal was still well above an eight-month low of $801.90 ounce hit on Tuesday.
US consumer prices rose at twice the rate expected in July to post the fastest rate of year-over-year growth in 17-1/2 years, a government report showed.
Bullish figures
"The figures are bullish for gold prices as higher inflation supports prices," Commerzbank's Fritsch said.
"This enforces our view that gold can pick up again and it has the potential to reach $900 in the medium term and $1,000 in the longer term."
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