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Thursday, July 2, 2009
Gold fell below $930 per ounce on Thursday as the dollar rose versus a basket of six currencies after a larger than expected dip in U.S. non-farm payrolls, which prompted some buying of the currency as a haven from risk. The euro also extended losses against the dollar after European Central Bank chief Jean Claude Trichet said euro zone activity was likely to be weak for the rest of the year. Spot gold fell to a low of $926.10 and was at $930.30 at 1516 GMT, versus $939.95 late in New York on Wednesday. "The dollar has gone up because the data has made everyone nervous, buying government bonds as a safe-haven asset," said Matthew Turner, an analyst at VM Group. U.S. employers cut 467,000 jobs in June, far more than expected, while the unemployment rate rose to 9.5 percent. The worse-than-expected data spurred safe-haven flows into the dollar, making gold pricier for holders of other currencies. Riskier assets, such as equities and some currencies, slipped in the wake of the numbers. While gold is often seen as a safe haven asset, moves in the dollar are taking precedence as the metal's main price driver. Ongoing volatility in the currency markets is set to benefit gold, according to traders. "I expect gold to recover ground as people look for alternatives to currencies," said Simon Weeks, head of precious metals at the Bank of Nova Scotia. "For the time being, though, we still remain in a $915-945 range." DEMAND OUTLOOK GRIM U.S. gold futures for August delivery fell to $930.10 an ounce, down more than 1 percent from the settlement on the COMEX division of the New York Mercantile Exchange. Indian imports were likely down by more than half in June from the same month a year ago, while imports into Turkey rose to 4.336 tons in June from zero the previous month, according to data from the Istanbul Gold Exchange. "The main story is in the physical market," said VM Group's Turner. "Indian imports were half of what they were in 2008, and in 2008 they were considered terrible." "What that tells you that these (gold) prices are only sustainable as long as precious metals are seen as a hedging asset by the wider investment community." Among exchange-traded funds, the SPDR Gold Trust, said holdings were at 1,120.55 tons as of July 1, unchanged from the previous business day. ETF Securities, however, said it saw inflows into its three gold ETFs on Wednesday. The more industrial precious metals -- silver, platinum and palladium -- also declined, pressured by the stronger dollar and reflecting losses on the base metals market. Spot silver dropped to $13.39 per ounce from $13.74 quoted in New York, while platinum fell to $1,185.50 against $1,198.50, and palladium dipped to $248 from $252.00. That is all for now. | ||||||||||||||||||||
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Gold and Silver News
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(Speaking on how high the gold price could go) Pierre Lassonde, President of Newmont Mining, recently had this to say: "I believe gold could have three zeros after the first number. I just don't know what the first number will be. |
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