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Gold hits four-month low at $850
Gold slipped to a four-month low below $850 an ounce on Thursday, as a sharp rise in the dollar lowered gold's appeal as an alternative investment and triggered a sell-off in precious metals.
- Reuters
- Published: 00:30 May 2, 2008
London: Gold slipped to a four-month low below $850 an ounce on Thursday, as a sharp rise in the dollar lowered gold's appeal as an alternative investment and triggered a sell-off in precious metals.
Silver and palladium hit three-month lows, while platinum shed 3 per cent to a one-month low below $1,850 an ounce.
Gold fell as low as $847.10 an ounce after rising to a high of $881.30. It was quoted at $851.75/$852.95 at 1537GMT, against $864.65/$866.05 in New York late on Wednesday.
"I think $850 is enough for now, but longer-term I expect to see (gold at) the 200-day moving average, currently at $822, before the correction will be complete," Simon Weeks, managing director of precious metals at Bank of Nova Scotia, said.
"Sentiment has been bearish for a while, but it's time to take a breather around this level before moving lower again. We see some physical and technical buying, but I think there will be better bargains in the coming days."
Precious metals came under pressure mainly because of the dollar, which rose to fresh five-week highs against the euro after a key US manufacturing index for April came in slightly better than expected.
A firmer dollar makes gold costlier for holders of other currencies and often lowers bullion demand. The metal is also generally seen as a hedge against oil-led inflation.
US gold futures also declined sharply, with the active contract for June delivery falling $12.70 an ounce to 852.40 an ounce.
Dealers expected volatile days ahead after a drop in bullion holdings in StreetTRACKS Gold Shares, the world's largest gold exchange-traded fund, to 580.45 tonnes as of Wednesday, shedding nearly 10 per cent in the last 10 days.
"We have fallen through a couple of support levels," said Tom Kendall, metals strategist at Mitsubishi Corporation. "There is more downward potential. We have got quite a lot of data out of the US over the next two days and that will determine where the dollar goes from here in the short term."
In industry news, Gold Fields said it had suspended some operations at its South Deep mine in South Africa after an accident that killed nine contract workers.
Spot platinum fell below $1,850 an ounce before rising to $1,858/$1,878, against $1,906/$1,921 late on Wenesday.
Silver fell to a low of $15.97 an ounce and was last quoted at $16.17/$16.22, versus $16.60/$16.65. Spot palladium was at $401/409 after falling to a low of $397 against $410.50/$418.50 late Wednesday.
It's time to take a breather around this level before moving lower again ... I think there will be better bargains in the coming days."
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