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Gold slips from highs as dollar strengthens
Gold was firmer in late European trading on Monday but off early highs as the dollar strengthened a touch against the euro, denting the precious metal's appeal as a currency hedge.
- Reuters
- Published: 00:08 July 22, 2008
London: Gold was firmer in late European trading on Monday but off early highs as the dollar strengthened a touch against the euro, denting the precious metal's appeal as a currency hedge.
Gold was trading at $962.40/963.40 an ounce at 1446 GMT from $955.45/957.05 an ounce late in New York on Friday, when it fell to a one-week low of $949.50.
A weaker dollar and more than a $2 per barrel gain in crude prices yesterday took gold to a session high of $968.25 earlier in the day.
But the precious metal slipped from highs as the dollar firmed against the euro after Bank of America reported stronger-than-expected quarterly earnings, helping allay fears over the health of the US financial sector.
"Early US dollar weakness and oil price strength has been reversed, [taking] the top off the gold price," said David Thurtell, an analyst at BNP Paribas.
Gold tends to move in the opposite direction to the dollar, as it is bought as a hedge against weakness in the US currency. A softer greenback also makes dollar-priced gold cheaper for holders of other currencies.
Link with oil
The precious metal also usually trades in line with oil, because of its appeal as an inflation hedge and its strength in crude prices boosts interest in commodities in general.
Oil rose more than $2 a barrel early yesterday after its biggest one-week slide on record as talks over Iran's nuclear programme ended in stalemate, dampening hopes the row would soon be resolved.
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