BLBG: Gold Prices May Fall in London as Stronger Dollar Curbs Demand
By Nicholas Larkin and Kim Kyoungwha
Dec. 21 (Bloomberg) -- Gold, little changed in London, may decline as gains in the value of the dollar curb demand for the metal as an alternative investment.
The dollar rose as much as 0.4 percent against the euro to trade near a three-month high amid signs that the world’s largest economy is gaining traction. Last week, gold fell for a third straight week, touching the lowest level since Nov. 6 as the U.S. currency rebounded.
“With the stronger dollar still the primary driving force, the metal remains at risk to a dip back to the $1,050-$1,080 area,” James Moore, an analyst at TheBullionDesk.com in London, said in a report.
Gold for immediate delivery fell $1.28, or 0.1 percent, to $1,111.92 an ounce at 9:14 a.m. local time. The metal fell 0.2 percent last week. Bullion futures for February delivery on the New York Mercantile Exchange’s Comex unit added 0.1 percent to $1,112.50 an ounce.
The precious metal has weakened 9.4 percent from an all- time high of $1,226.56 reached on Dec. 3 as the dollar gained 5.3 percent against the euro in the period. Bullion typically moves inversely to the dollar.
Prices rose 1.3 percent on Dec. 18 after a confrontation between Iraqi and Iranian forces over a disputed oil well increased “geopolitical risks in the Middle East,” said Hwang Il Doo, a senior trader with KEB Futures Co. in Seoul. Iranian troops withdrew from the al-Fakah well on Dec. 19, Iraqi government officials said yesterday.
“Gold prices have obviously came under the pressure on the dollar’s reversal,” said Toby Hassall, an analyst with CWA Global Markets Pty Ltd. in Sydney. “The dollar will continue to be the primary driver.”
Gold holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by the metal, increased 6.1 metric tons to 1,126.61 tons on Dec. 18, its Web site showed. They climbed to a record 1,134 tons on June 1.
Among other precious metals for immediate delivery in London, silver added 0.3 percent to $17.30 an ounce. Platinum gained 0.2 percent to $1,431.25 an ounce and palladium was 0.1 percent higher at $364.45 an ounce.
To contact the reporters on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net; Nicholas Larkin at nlarkin1@bloomberg.net
