Gold $1050 Fourth QGold Declines in Asian Trade as Dollar Climbs, Crude Oil Slumps
By Glenys Sim
July 6 (Bloomberg) -- Gold declined in Asian trading as thedollar advanced and crude oil tumbled, reducing demand for theprecious metal as a store of value.
Bullion slid 0.8 percent last week as the dollar index,which tracks the greenback against six major currencies, gained0.6 percent and oil slumped 3.5 percent. Gold is typically seenas a hedge against accelerating consumer prices and analternative to a depreciating currency.
“Gold’s been stuck in the $900-$950 range for a while,driven by the performance of the dollar and demand for a safehaven,” said Zhu Lv, research manager at Shanghai TonglianFutures Co. “Longer term inflationary expectations will keep itabove $900.”
Gold for immediate delivery dropped 0.4 percent to $928.82an ounce at 9:13 a.m. in Singapore. The dollar index was littlechanged after rising as much as 0.2 percent earlier, while crudeslid 2.3 percent to $65.20 a barrel.
Still, gold’s losses may be limited as investors raisetheir allocations of the precious metal for the third quarter.Eighteen of 31 traders, investors and analysts surveyed byBloomberg News, or 58 percent, said bullion would gain this week.Eight people forecast lower prices and five were neutral.
“While gold has been knocked back from its recent high, webelieve that prices will still trend higher through theremainder of this year,” David Barclay, commodity strategist atStandard Chartered Plc, said in a monthly report.
“Gold’s correlation with the U.S. dollar has become closerin recent weeks, and a substantially weaker U.S. dollar in thesecond half of 2009 still underpins our view,” said Barclay,who forecasts gold to average $975 an ounce in the third quarterand $1,050 an ounce in the fourth quarter of this year.
Among other precious metals for immediate delivery, silverdropped 0.5 percent to $13.3325 an ounce, platinum declined 0.5percent to $1,176 and palladium slid 1.1 percent to $245 anounce as of 9:15 a.m. in Singapore.
To contact the reporter on this story:Glenys Sim in Singapore atgsim4@bloomberg.net
Last Updated: July 5, 2009 21:23 EDT