BLBG: Gold Declines to Three-Week Low as Stronger Dollar Curbs Demand
By Pham-Duy Nguyen and Nicholas Larkin
Jan. 21 (Bloomberg) -- Gold fell for a second straight day in New York, sliding to the lowest price this month, as a rising dollar curbed demand for the metal as an alternative investment.
Before today, the dollar rose 1.3 percent this week against a basket of six major currencies. The greenback touched a five- month high against the euro today. Gold rose 24 percent in 2009, rallying to a record on Dec. 3, as the dollar fell 4.2 percent.
“The dollar is just incredibly strong, and that’s forcing gold lower,” said Leonard Kaplan, the president of Prospector Asset Management in Evanston, Illinois.
Gold futures for February delivery tumbled $20, or 1.8 percent, to $1,092.60 at 11:06 a.m. on the New York Mercantile Exchange’s Comex unit. That’s the lowest price for a most-active contract since Dec. 30.
The dollar rallied this week as investors shunned risk after China took steps to tighten credit and limit growth.
“The dollar continued receiving a boost from safe-haven seekers spooked by the prospect of easy money drying up all over the place,” Jon Nadler, a Kitco Inc. senior analyst in Montreal, said in a report.
Central Banks
Gold climbed for a ninth straight year in 2009 as governments cut interest rates and spent trillions of dollars to prop up economies, while central banks in nations including India and China boosted bullion reserves. Bank Rossii, Russia’s central bank, said on its Web site it added 800,000 ounces to its gold reserves last month, increasing holdings to 20.5 million ounces.
Gold may drop to around the 100-day moving average of $1,080 after breaching the 50-day moving average around $1,133 yesterday, said Matt Zeman, a metals trader at LaSalle Futures Group in Chicago.
“The next session or two will be very important,” Zeman said. “We need to see gold snap back fairly quickly. If gold can’t recapture the 50-day, you’ve got to get bearish very quickly.”
Bullion held by the SPDR Gold Trust, the biggest exchange- traded fund backed by the metal, was unchanged at 1,111.92 metric tons yesterday, according to the company’s Web site.
In other New York precious-metals markets, silver futures for March delivery in New York declined 35.5 cents, or 2 percent, to $17.525 an ounce. April platinum fell $17.60, or 1.1 percent, to $1,600 an ounce. Palladium for March delivery slid $3.40, or 0.7 percent, to $458.65 an ounce.
To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.
