MW: Gold futures extend losses as U.S. dollar rises vs. rivals
By Polya Lesova, MarketWatch
FRANKFURT (MarketWatch) -- Gold futures declined on Tuesday, joining a broad-based sell-off in commodity prices, as the U.S. dollar rose against the euro on the back of renewed worries over debt levels in the euro zone.
Gold for April delivery dropped $13, or 1.1%, to $1,111 an ounce in electronic trading on Globex. The contract ended down 1% on Monday.
The recent strengthening of the dollar "as well as general profit-taking from a large run-up seem to be the first lines hitting gold," said Zachary Oxman, managing director at TrendMax Futures.
Also, there seems to be a fear trade in the market, which may be weighing on gold, Oxman said in emailed comments. He expects the recent bout of selling to be short-lived.
"I'd use these dips to accumulate a long-side trade," Oxman said.
The U.S. dollar gained against most of its rivals on Tuesday, as worries about debt levels in the euro zone were rekindled after Fitch Ratings warned that Portugal remained vulnerable to a downgrade. The euro fell 0.6% to $1.3549 and the British pound dropped 0.7% to $1.4953.
The dollar index (DXY 80.80, +0.37, +0.45%) , which tracks the greenback against a trade-weighted basket of currencies, gained 0.4% to 80.818.
Dollar strength weighs on dollar-denominated commodities, because it makes them more expensive for holders of other currencies. Oil futures also posted losses, with the April contract trading down $1.58 to $80.29 a barrel on Globex. Read more about oil.
Also on Globex, March silver fell 32 cents, or 1.9%, to $16.93 an ounce and April platinum futures declined $28.10 to $1,572 an ounce.
March palladium fell $12.50, or 2.7%, to $457.85 an ounce and March copper dropped 5.20 cents to $3.345 a pound.
In other news, Yi Gang, director of China's State Administration of Foreign Exchange, said Tuesday that gold is not a bad asset, but a few factors limit China's ability to increase foreign-exchange investment in gold, according to a media report.
Yi said at a press conference that China's gold reserves, at 1,054 metric tons, were the fifth-largest in the world, Dow Jones Newswires reported.
