Business | Markets
Gold prices fall as dollar firms
Gold slipped on Tuesday as the dollar climbed, denting the metal's appeal as a currency hedge, with falling oil prices and a stronger opening on Wall Street also dampening buying.
- Reuters
- Published: 21:26 July 29, 2008
London: Gold slipped on Tuesday as the dollar climbed, denting the metal's appeal as a currency hedge, with falling oil prices and a stronger opening on Wall Street also dampening buying.
Gold slid to $920.30/921.30 an ounce at 1345 GMT from $928.45/929.65 late in New York on Monday.
"[This move] is pretty much forex related, and oil is coming down," said senior Commerzbank trader Michael Kempinski. "We need to see some stronger commodities in general, and a stronger euro, to push gold higher again."
The dollar posted gains against the euro on Monday, pressuring bullion prices. Gold tends to trade in the opposite direction to the US currency, to which it is often bought as an alternative investment.
The metal's other main external driver, oil, slipped lower, pulling gold in its wake, as signs of weakening demand and a rising dollar outweighed the supply threat linked to tensions in Iran and Nigeria.
While gold benefited from equity market weakness earlier on Monday, it dipped in later trade as stocks ticked up, dampening interest in the precious metal as an alternative investment.
US equities rose at the open yesterday as oil prices fell and a raft of companies, including biotech giant Amgen released better-than-expected earnings reports.
Until there are significant moves in oil and the dollar, prices are set to remain range-bound, analysts said, with physical buying muted during the low-demand summer season, and exchange-traded funds' holdings steadying after recent gains.
Gold traders are awaiting the release of US economic data due later this week to give fresh direction to trade.
The data, including GDP numbers and initial jobless claims on Thursday, could have a significant impact on the dollar.
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