Business | Markets
Strong dollar takes shine off gold
Gold slipped more than 3 per cent in Europe yesterday as the surging dollar dented the precious metal's appeal as an inflation hedge, and as weakness on the equity markets prompted selling of gold to meet margin calls.
- Reuters
- Published: 23:36 October 27, 2008
London: Gold slipped more than 3 per cent in Europe yesterday as the surging dollar dented the precious metal's appeal as an inflation hedge, and as weakness on the equity markets prompted selling of gold to meet margin calls.
Other precious metals such as silver and platinum were caught up in the sell-off, with platinum sliding nearly 6 per cent as traders worried over the demand outlook for the metal used in catalytic converters.
Spot gold was at $715.70/$718.20 at 1013 GMT, down from $733.30 an ounce in New York late on Friday. Earlier it touched a session low of $706.10.
"The dollar is part of the fall, and another component is fund selling," Standard Bank analyst Manqoba Madinane said. "There is just a general fear in the market. No one knows where the floor is.
"The ongoing selling [of equities] will affect gold on the basis that funds need to get money out of the market," he added. "That will be negative for gold."
The market slipped as the stronger dollar dented gold's appeal as an alternative investment to the currency.
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