Business | Markets
Gold heads for worst monthly slump in 25 years
Gold fell for the second day in Asia, extending a monthly drop that may become the worst in more than 25 years, as a stronger dollar and declines in crude oil reduced its appeal as an alternative asset.
- Bloomberg
- Published: 09:48 October 31, 2008
Singapore: Gold fell for the second day in Asia, extending a monthly drop that may become the worst in more than 25 years, as a stronger dollar and declines in crude oil reduced its appeal as an alternative asset.
Gold tumbled by more than 15 per cent this month, the largest plunge since February 1983, according to Bloomberg data.
Oil has slumped 37 per cent while the dollar index against six major currencies gained 7.3 per cent this month.
"The gold price moved lower, influenced by a firmer US dollar against the euro and the easing in oil prices," David Moore, commodity strategist at Commonwealth Bank of Australia in Sydney, said in a report on Friday.
Bullion for immediate delivery traded 0.8 per cent lower at $732.62 an ounce in Singapore after dropping 2.2 per cent on Thursday. Silver for immediate delivery slumped 4.2 percent to $9.38 an ounce.
The dollar has gained 7.8 per cent since the collapse of Lehman Brothers Holdings Inc. last month. The currency traded at $1.2818 per euro in Singapore, from $1.2915 on Thursday in New York.
Bullion is also under pressure as global interest-rate cuts sparked a rally in stocks on Thursday, boosting demand for higher- yielding assets, Ng Cheng Thye, head of precious metals markets at Standard Bank Asia, said by phone from Singapore.
"As confidence seems to return to stock markets, some people may prefer to liquidate gold positions to buy stocks," Standard Bank's Ng said.
December-delivery gold fell 1.2 per cent to $729.50 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.
Gold for December delivery in Shanghai fell 5 per cent, the maximum allowed in one day, to $723 an ounce.
Gold for October delivery fell as much as 150 yen, the maximum allowed in one day, to $727 an ounce on the Tokyo Commodity Exchange.
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