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Gold slips from highs as dollar recovers
Gold firmed in Europe yesterday, but slipped from highs hit in Asian trade as the dollar recovered some lost ground against the euro.
- Reuters
- Published: 23:21 August 18, 2008
London: Gold firmed in Europe yesterday, but slipped from highs hit in Asian trade as the dollar recovered some lost ground against the euro.
At 1351 GMT, spot gold was at $797.30/$798.50 an ounce, up from $787.65/$789.25 late on Friday in New York but off its earlier session high of $803.65.
The yellow metal climbed more than two per cent to above $800 an ounce in Asia as the dollar slipped and oil climbed, triggering a wave of short covering.
But the metal failed to hold on to those gains as the dollar steadied amid expectations it could be due another leg higher. Gold typically moves in the opposite direction to the US currency, as it is often bought as a hedge against dollar weakness.
"We are seeing people jump from gold into the US dollar again," said Philip Carlsson, global product manager for futures and options at Saxo Bank.
But analysts say higher crude prices are underpinning gold, which is often bought as a hedge against oil-led inflation.
Oil climbed more than 1 per cent to an intraday high above $115 a barrel as investors worried Tropical Storm Fay could disrupt operations in the Gulf of Mexico.
Short-covering
A wave of short-covering inspired by the weaker dollar and some bargain hunting after gold slipped $70 an ounce last week pushed prices higher yesterday.
But the precious metal is susceptible to further downward moves if the dollar resumes its upward trend, analysts say.
According to data released on Friday by the US Commodity Futures Trading Commission, traders are tending to close out long positions, or commitments to buy.
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