BLBG: Gold Drops From Near Record as Dollar Strengthens, Trims Appeal
By Nicholas Larkin and Chanyaporn Chanjaroen
Sept. 17 (Bloomberg) -- Gold, trading about 1.5 percent below a record, declined in London and New York as the dollar rebounded, curbing the metal’s appeal as an alternative investment.
The U.S. Dollar Index advanced 0.1 percent, reversing a drop that took it to the lowest level in almost a year. Gold’s 14-day relative strength index, which shows how rapidly prices have advanced or dropped during a specified time period, is at 72.13. A reading of 70 or more is a signal to some traders that prices are set to drop.
“There’s some technical concern that the strength isn’t going to last too long,” David Barclay, an analyst at Standard Chartered Plc in London, said today by phone. “Still, the dollar will be the crucial driver of gold going forward.” He forecast gold will average $1,050 an ounce in the fourth quarter as the dollar resumes its slide.
December gold futures dropped $3.20, or 0.3 percent, to $1,017 an ounce on the New York Mercantile Exchange’s Comex division at 8:24 a.m. local time, after advancing as high as $1,025.80. They reached a record $1,033.90 an ounce in March 2008. Immediate-delivery bullion lost $1.94, or 0.2 percent, to $1,015.38.
Holdings of bullion in the SPDR Gold Trust, the biggest ETF backed by the metal, increased 7.63 metric tons to 1,086.48 tons yesterday, data on the company’s Web site showed. The fund’s holdings reached a record 1,134.03 tons on June 1.
‘Under Pressure’
“With the dollar under pressure and investment demand for equities and commodities increasing, gold will remain buoyant in coming sessions,” James Moore, an analyst at TheBullionDesk.com in London, said in a report. “There is little to stand in the way of last year’s all-time high, particularly with exchange- traded-fund buyers joining the frenzy.”
The metal rose to $1,020.50 an ounce in the morning “fixing” in London, used by some mining companies to sell production, from $1,015.75 at yesterday’s afternoon fixing.
Gold has climbed 15 percent in London this year, while the dollar index, a six-currency gauge of the greenback’s strength, has slipped 6.2 percent. The measure declined as much as 0.3 percent today.
Silver for immediate delivery in London climbed as much as 1.5 percent to $17.6675 an ounce, the highest since August 2008, and was last down 0.1 percent at $17.39. The metal has rallied 53 percent this year.
Platinum Gains
An ounce of gold now buys about 58.2 ounces of silver in London, the least since August 2008, according to Bloomberg data. That’s down from a high of 84.4 ounces on Oct. 10, which was the most since March 1995.
Platinum gained as much as 0.5 percent to a one-year high of $1,351.50 an ounce and was last down 0.8 percent at $1,335. Palladium, the best-performing precious metal this year, was 0.2 percent higher at $298.55 an ounce after reaching a one-year high of $302.25.
