WSJ: PRECIOUS METALS: Comex Gold Pressured As Dollar Rallies
Gains by the U.S. dollar put gold futures back under pressure Tuesday morning.
Around 8:56 a.m. EST (1356 GMT), February gold was down $16 to $1,148 an ounce on the Comex division of the New York Mercantile Exchange. March silver was 40.5 cents lower at $17.955.
"It seems to be the stronger dollar and also follow-through from Friday's sell-off," said Tom Pawlicki, precious metals analyst with MF Global.
The December dollar index was up 0.215 point to 76.025. Market participants often buy gold as a hedge against dollar weakness, and conversely sell the metal when the dollar rises.
As for Friday, gold fell sharply when the dollar rose after a stronger-than-forecast U.S. jobs report led to ideas that interest rates might rise sooner than previously thought. Gold bounced from Monday's lows after Federal Reserve Chairman Ben Bernanke reiterated that rates would not rise for an "extended time," but the dollar rose and the metal weakened again overnight.
Currency analysts said Bernanke's remarks have not made traders ignore the better-than-expected jobs report completely, and soft European industrial-production data weighed on currencies there. Additionally, Moody's Investors Service warned that the U.K. and U.S. need to rein in deficits in order to hold onto their triple-A credit ratings.
"A stronger dollar seems to be based on a risk-aversion trade," Pawlicki said. "There seems to be some dithering by Dubai's leaders on whether to rescue Dubai World. Moody's downgraded the government-related debt, and sterling is trading sharply lower."
Gold "got ahead of itself" on a run-up to record highs prior to Friday and as a result is giving back some of its gains from the last several weeks, Pawlicki said.
Gold is moving in tandem with a number of other markets, including crude oil, the S&P futures and most overseas currencies, a trader said.
"They're all traveling as a pack," he said. "We're just seeing a resurgent dollar and weakness in some of the commodities."
Pawlicki put the nearby chart support for February gold at Monday's low of $1,136.10, then $1,100.
-By Allen Sykora, Dow Jones Newswires; 541-318-8765; allen.sykora@dowjones.com
