BLBG: Gold Declines as Stronger Dollar May Reduce Investment Demand
By Nicholas Larkin and Kim Kyoungwha
Oct. 28 (Bloomberg) -- Gold declined in London on speculation that a rebounding dollar will curb demand for the precious metal as an alternative investment.
The Dollar Index, a six-currency gauge of the greenback’s performance, was little changed after four days of gains. The measure slipped to a 14-month low on Oct. 21. Gold, which often moves inversely to the dollar, has dropped 3.4 percent since touching an all-time high of $1,070.80 an ounce on Oct. 14.
“We could well be in for a surprise if the negative dollar sentiment turns,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said in a report. “Bullion is trading against risk aversion. The dollar is still a preferred safe-haven asset, to a certain extent.”
Gold for immediate delivery lost $5.28, or 0.5 percent, to $1,034.78 an ounce by 9:30 a.m. local time. The metal yesterday slipped to $1,032.55, the lowest price since Oct. 6. December gold futures fell 20 cents to $1,035.20 an ounce on the New York Mercantile Exchange’s Comex division.
“The gold market is still very much reflecting developments in the dollar,” said Toby Hassall, an analyst with CWA Global Markets Pty Ltd. in Sydney. Any drop in bullion is “certainly reaction to a bounce in the dollar.”
The metal is up 18 percent this year and heading for a ninth consecutive annual increase, the best performance since at least 1948.
Fewer Long Positions
Hedge funds and other large speculators trimmed net-long positions, or bets on higher prices, in gold futures by 2 percent as of Oct. 20 from a record the previous week, Commodity Futures Trading Commission data show. Miners, producers and commercial users increased their net-short position.
Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, fell 1.22 metric tons to 1,105.65 tons yesterday. The fund’s holdings reached a record 1,134 tons on June 1.
Among other precious metals for immediate delivery in London, silver fell 0.9 percent to $16.56 an ounce. Platinum added 0.1 percent to $1,315.50 an ounce, while palladium was 0.5 percent lower at $326.50 an ounce.
Palladium held in ETF Securities Ltd.’s exchange-traded products rose 2.2 percent to a record 575,026 ounces yesterday, according to the company’s Web site. Platinum holdings increased 1.6 percent to 389,748 ounces.
