Gold slips amid global rate worries, falling crude
By Polya Lesova, MarketWatch
Last Update: 8:57 AM ET Jun 25, 2007
NEW YORK (MarketWatch) -- Gold futures fell early Monday, as ongoing worries over higher global interest rates as well as retreating crude-oil prices weighed on the precious metal.
Gold for August delivery fell $3.30 to stand at $653.70 an ounce on the New York Mercantile Exchange. The contract closed up $2.80 an ounce on Friday but ended the week as a whole lower. Read more.
Other metals prices also declined to start the week.
"Interest-rate speculation is likely to suppress the gold price in the week ahead, although a surge in oil or bout of dollar weakness will no doubt trigger buying interest," said James Moore, metals analyst at TheBullionDesk.com, in a research report.
In energy, crude-oil prices fell Monday after a general strike was called off in oil-rich Nigeria over the weekend.
On the currency markets, the dollar fell against Japan's yen but traded a bit higher against the euro.
Meanwhile, July silver fell 4 cents to $12.980 an ounce, July platinum sank $8.90 to $1,299.10 an ounce, September palladium lost $2.90 to $379.05 an ounce and July copper dropped 8.15 cents, or 2.4%, to $3.3015 a pound.
Gold warehouse inventories were unchanged at 7.45 million troy ounces as of late Thursday, according to Nymex data. Silver supplies rose by 4.98 million troy ounces to 136.6 million troy ounces as of late Friday, while copper supplies dropped to 22,746 short tons, down 311 short tons.
Warning by Bank of International Settlements
Also potentially on traders' radar screens, the Bank for International Settlements has issued a warning about the cumulative effect of monetary policy.
Years of loose monetary policy have fueled a dangerous credit bubble, the BIS says, leaving the global economy more vulnerable to another 1930s-style slump than is generally understood, according to a report on the Web site of the U.K.'s Telegraph newspaper.
The BIS, a bank for central bankers, pointed to a variety of worrisome signs, including mass issuance of new types of credit instruments, soaring levels of household debt, extreme appetite for risk shown by investors, and entrenched imbalances in the world currency system, the report said.
"While gold would ultimately benefit from such a dire scenario, the initial phases of the global liquidation mania would severely dent gold's value," said Jon Nadler, analyst at Kitco Bullion Dealers.
"The rush for liquidity and the mania for risk aversion could make gold a victim, right along with most assets," Nadler said. "Eventually, gold could become a reverse hedge, falling less than other assets."
Polya Lesova is a MarketWatch reporter based in New York. |
