Gold veers to 2-mth low, pummelled by dollar rally
Posted online: Saturday, April 16, 2005 at 0027 hours IST
financialexpress.com
SINGAPORE, APRIL 15: Gold hovered near 2-month lows in Asia on Friday, slipping after a rally in the US dollar prompted funds to switch out of the precious metal. Spot gold was trading at $422.30/423.20 an ounce by 0533 GMT, versus $423.65/424.40 an ounce last quoted in New York and not far from a two-month low of $421.75 an ounce hit on Thursday.
The bullion market discounts this weekend’s G7 meeting where officials will discuss a proposal for the International Monetary Fund to sell part of its gold reserves for third-world debt relief. But a firming dollar worries dealers. The euro was lower than New York’s levels, trading at $1.2791. The dollar rose on bets that US interest rates will keep rising, making dollar-based assets more attractive.
“This time, fund managers around the world will make an adjustment to reduce their long positions,” Yukuji Sonoda, a precious metals analyst at Daiichi Commodities in Tokyo. Sonoda expected gold to trade in a range of $420 to $430 an ounce next week, adding that the IMF was unlikely to sell some of its gold reserves because of US opposition.
Gold, used as jewellery and as investments, has dropped more than 7% since reaching a 16-year high at $456.75 in early December. In Japan, fund selling dragged down Tokyo gold futures ahead of the meeting of the Federal Reserve’s rate-setting panel on May 3, when the central bank was expected to raise interest rates. The benchmark February gold futures contract in
Tokyo Commodity Exchange fell eight yen per gram at 1,475 yen.
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