Business | Markets
Gold extends losses as dollar climbs
Gold slipped in Europe on Tuesday, extending the previous session's losses, as the dollar firmed against the euro and oil prices sank to a 3-1/2 year low, denting interest in the precious metal as an inflation hedge.
- Reuters
- Published: 23:25 December 2, 2008
London: Gold slipped in Europe on Tuesday, extending the previous session's losses, as the dollar firmed against the euro and oil prices sank to a 3-1/2 year low, denting interest in the precious metal as an inflation hedge.
In addition, rising risk aversion is prompting a sell-off of equities and commodities, while "safer" assets such as the yen and government bonds are soaring.
Spot gold was quoted at $766.40 to $768.40 an ounce in the morning, down from $770.60 an ounce late in New York on Monday.
Gold is being pressured by an upturn in the dollar, which firmed against the euro on Monday after weak euro zone manufacturing data and on rate-cut expectations from the European Central Bank later this week.
The US currency extended those gains on Tuesday.
"On Friday there was a break lower in the euro-dollar exchange rate, and that was a sign that gold was about to come off," said Societe Generale senior commodities strategist Jesper Dannesboe.
"Gold came off on Monday, and euro-dollar is further down now," he said.
Tumbling oil prices are also pressuring the precious metal, often bought as a hedge against oil-led inflation.
Crude slipped to a 3-1/2 year low under $48 a barrel as signs grew that the world economy is in worse shape than previously feared, and after Opec opted to defer an output cut .
The price of other hard commodities such as copper and tin were also lower.
Equity markets also fell as risk aversion intensified. World stocks slipped as investors worried about the prospect of a deep global recession, while the yen and government bonds climbed.
Investors are awaiting for key data due later this week, on US non-farm payrolls numbers on Friday, and interest rate decisions from central banks for clues on direction of trade.
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