BLBG: Gold Drops in New York on Speculation Dollar Will Strengthen
By Chanyaporn Chanjaroen and Kim Kyoungwha
Dec. 29 (Bloomberg) -- Gold futures fell in New York, ending a three-session advance, on speculation that gains by the dollar will erode demand for the metal as a hedge against weakness in the currency.
The U.S. Dollar Index, a six-currency gauge of the greenback’s strength, rallied 3.4 percent this month. The dollar is trading at almost a two-month high against the yen on bets the U.S. Federal Reserve will start withdrawing emergency stimulus measures. Figures today may show that U.S. consumer confidence gained.
“We expect the dollar to provide a degree of price direction in coming sessions,” James Moore, an analyst at TheBullionDesk.com in London, wrote in a report today.
Gold for February delivery fell $2.70, or 0.2 percent, to $1,105.20 an ounce on the New York Mercantile Exchange’s Comex unit at 8:49 a.m. local time. The contract added 2 percent in the three sessions through yesterday. Bullion for immediate delivery slipped 0.2 percent to $1,104.68 in London.
The metal slid to $1,103 an ounce in the morning “fixing” in London, used by some mining companies to sell production, from $1,085.25 at the afternoon fixing on Dec. 23. Futures have advanced 25 percent this year, on course for a ninth straight annual climb.
The 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. New York time.
Dollar ‘Pressure’
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, silver futures for March delivery slid 0.7 percent to $17.435 an ounce. Platinum futures for April delivery dropped 0.5 percent to $1,481.70 an ounce, and March palladium gained 0.3 percent to $390 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.
