BLBG: Gold Drops in London on Speculation the Dollar Will Strengthen
By Chanyaporn Chanjaroen and Kim Kyoungwha
Dec. 29 (Bloomberg) -- Gold fell for the first time in five days in London on speculation the dollar will strengthen, diminishing demand for the metal used by some investors to hedge against weakness in the currency.
The U.S. Dollar Index, a gauge against six counterparts, rallied 3.4 percent this month. The index may gain before a report later today that economists forecast will show U.S. consumer confidence grew this month, adding to speculation the Federal Reserve may end emergency stimulus measures.
“We expect the dollar to provide a degree of price direction in the coming sessions,” James Moore, an analyst at London-based TheBullionDesk.com, wrote in a report today.
Gold for immediate delivery slipped $3.07, or 0.3 percent, to $1,104.23 an ounce at 10:25 a.m. in London. Gold for February delivery in New York fell 0.3 percent to $1,104.90 an ounce. Bullion rose 25 percent this year in London, heading for a ninth consecutive annual advance.
The New York-based Conference Board’s consumer confidence index probably rose to 53 this month from 49.5 in November, according to the median estimate of economists in a Bloomberg News survey. The data will be released at 10 a.m. local time.
Gold probably will extend its longest winning streak in at least six decades next year on concern that inflation will accelerate and the dollar weaken, according to this year’s most accurate forecaster.
“As long as we see a zero interest-rate policy in the U.S. and the probability of continued big fiscal deficit, the dollar is going to be under pressure again,” said Philip Klapwijk, chairman of London-based research company GFMS Ltd. Klapwijk in January predicted gold would average $970 an ounce this year. The actual average through Dec. 28 was 0.2 percent higher.
Among other precious metals, platinum for immediate delivery dropped 0.4 percent to $1,475 an ounce, silver slid 0.4 percent to $17.44 an ounce and palladium was down 0.9 percent at $386.46 an ounce.
To contact the reporters on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net; Kyoungwha Kim in Singapore at kkim@bloomberg.net
