MW: Gold futures fall as dollar gains ahead of Fed, G20 meetings
By Polya Lesova, MarketWatch
FRANKFURT (MarketWatch) -- Gold futures fell 1% Monday to trade near $1,000 an ounce, as the U.S. dollar surged against major rivals, reducing the appeal of the precious metal.
Gold for December delivery dropped $9.70, or 1%, to $1,000.60 an ounce in electronic trading on Globex.
Earlier, the contract hit an intraday low of $996.30 an ounce. December gold is the most actively traded contract.
"The G20 meeting and speculation the Fed could signal the end of its economic stimulus program this week has bolstered the greenback overnight," wrote James Moore, analyst at TheBullionDesk.com, in a note to clients.
"Pre-Fed jitters, concerns commodities and equities are overbought following the recent price surge and further dollar gains have weighed gold back to the $1,000 level," Moore said, adding that the metal may have a turbulent week, possibly testing back to the $985-$990 area.
The dollar index (DXY 76.87, +0.32, +0.41%) , which tracks the greenback against a trade-weighted basket of currencies, rose 0.6% to 76.863. Dollar strength typically weighs on dollar-denominated commodities such as gold and oil.
The Federal Reserve will release Wednesday a statement on monetary policy that may clarify how the central bank plans to unwind its quantitative easing programs.
Leaders from the Group of 20 nations, which represent 85% of the global economy, will meet in Pittsburgh on Thursday and Friday. They will discuss further actions to ensure a sustainable recovery from the global financial and economic crisis.
Other metals also posted losses in electronic trading on Globex. December silver futures dropped 44 cents, or 2.6%, to $16.63 an ounce and October platinum futures declined $21.40, or 1.6%, to $1,316.80 an ounce.
The International Monetary Fund said Friday that its executive board has approved the sale of 403.3 metric tons of gold, which is one-eighth of the fund's total holdings.
The proceeds from the sales will increase the IMF's resources for lending to low-income countries. The IMF said it will conduct the gold sales in a way that avoids disruption of the gold market.
Analysts at bullion dealers GoldCore said the announcement was widely expected and has been largely priced in. China, Russia and India have expressed interest in recent weeks in buying gold from the IMF, they also said.
