BLBG: Gold Weakens a Fifth Day as Dollar Rally Cools Investor Demand
By Kim Kyoungwha
Feb. 1 (Bloomberg) -- Gold weakened for a fifth day, the longest losing streak since August, as the dollar continued a rally against major currencies, sapping demand for the metal.
Immediate-delivery bullion fell as much as 0.4 percent to $1,076, reversing an earlier gain of the same magnitude. The Dollar Index, a six-currency gauge of the dollar’s value, rose to the highest level since July 2009.
“The dollar’s sustained rally is spooking sentiment for gold,” said Hwang Il Doo, a senior trader at KEB Futures Co. in Seoul. “Signs of improving U.S. economy is raising speculation that interest rate hike could come earlier than anticipated.”
Gold advanced 24 percent last year as the Federal Reserve held interest rates near zero percent to spur growth, helping send the dollar down 4.2 percent. The metal, which traded at $1,079.97 at 2:17 p.m. in Singapore, reached $1,226.56 on Dec. 3, the highest price ever.
Bullion, which moves inversely to the dollar, declined for a second month in January as the dollar rallied 2 percent against the basket of six major currencies. The U.S. currency was at $1.3864 per euro in Tokyo from $1.3863 in New York on Jan. 29.
Eleven of 22 traders, investors and analysts surveyed by Bloomberg, or 50 percent, said bullion would decline this week. Seven forecast higher prices and four were neutral.
Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, slid 1.9 percent to 1,111.92 metric tons on Jan. 29, according to the company’s Web site.
Still, gold prices near the lowest level in three months may help attract some buyers.
“We’re seeing some bargain hunters active as physical buyers and that’s supportive,” said Kate Harada, a trader at Mitsubishi Corp. Futures & Securities Ltd. in Tokyo. “The Dollar Index is still the key.”
Among other precious metals, silver decreased 0.3 percent to $16.1575 an ounce, platinum rose 0.7 percent to $1,514.50 an ounce and palladium was little changed at $417.75 an ounce.
To contact the reporter on this story: Kyoungwha Kim in Singapore at Kkim19@bloomberg.net
