New York: Gold dropped in New York as the dollar rebounded after five consecutive declines, eroding demand for the precious metal as an alternative investment.
Gold and the US currency usually move inversely, and the metal got an added boost on Wednesday as oil prices jumped 2.1 per cent. The dollar climbed 0.8 per cent yesterday against the euro and oil was little changed.
"The stronger influence is the dollar," said Edel Tully, a precious-metals strategist at UBS Ltd. in London.
"The market is in a bit of a consolidation mode, which is not a bad thing."
Gold for June delivery dropped $7 (Dh25.69), or 0.6 per cent, to $1,152.60 an ounce at 8.42am on the Comex in New York. Prices are down from a four-month high of $1,170.70 on December 4. Immediate-delivery bullion declined 0.3 per cent to $1,152.43 in London.
The metal fell to $1,151.25 an ounce in the morning "fixing" in London, used by some miners to sell production, from $1,153.75 at the afternoon fixing on Wednesday.
Silver for May delivery declined 0.7 per cent to $18.285 an ounce. Holdings in the iShares Silver Trust, the biggest stock-exchange product holding silver, decreased 106.74 tonnes on Wednesday. Overall silver ETF holdings fell 107 tonnes, the largest outflow since mid-January, Barclays Capital said in a report yesterday..
Silver is mostly used in industrial applications such as electrical switches and batteries.
"Given silver's fundamentals remain weak, should the support from positive investment turn negative, prices are susceptible to sizeable price corrections," Barclays analyst Suki Cooper wrote in the report.
Investors raised ETF holdings of gold by 51 per cent last year to "preserve wealth due to their rising concerns regarding currency values and financial stability," London-based research company GFMS said in a report on Wednesday.
