Gold strikes 8-week low on USD
Aug 08 2008 11:59
Singapore - Gold tumbled to an eight-week trough in volatile trade on Friday, losing some of its shine as an alternative investment after the dollar jumped against the euro, prompting some investors to switch funds back into currencies.
But lower prices spurred buying from jewellers in India, the world's main consumer, and other countries in Asia. Platinum failed to sustain gains as fears of supply curbs following a one-day strike in main producer South Africa subsided.
Silver tumbled to its weakest since late January, tracking gold.
Gold hit a high of $873.50 an ounce before dropping back to
$863.25/864.25 an ounce, down from $871.05/872.45 late in New York. The metal also hit an intraday low of $862.00 an ounce,
an eight-week trough, on selling pressure from the rising dollar.
"It's very bearish. Oil prices are dropping, the dollar is up and platinum is very bad. People are scared about the volatile market," said Ronald Leung, director of Gold Dealer in Hong Kong.
Gold has dropped more than 15% in value since spiking to a record high of $1 030.80 hit in March.
Dollar domination
The euro extended losses against a broadly stronger dollar to fall more than 1% as concerns about the region's growth outlook weighed on the European currency.
In Singapore, physical dealers reported buying interest from India ahead of Hindu festivals which culminate with Diwali in October, pushing up premiums for gold bars to 75c to the spot London price from 60c last week.
"In the absence of commodity-type news, I think the market is probably going to be weaker. I think it's mainly dollar-dominated today," said Mark Pervan, an ANZ senior commodity analyst.
"I think around $850 would be a critical level," said Pervan, who pegged resistance at $900.
Spot platinum fell to $1 565.00/1 577.00 an ounce from
$1 572.00/1 592.00 late in New York, having hit a high of $1 578.50 an ounce.
Platinum off best levels
"As for platinum, $1 550 may be the next target. If you
compare with Johnson Matthey's forecast, this is incredibly
cheap," said Yukuji Sonoda, precious metals analyst at Daiichi
Commodities.
Platinum prices have taken a dramatic turn since spiking to a record high at $2 290 an ounce in early March, losing much of their gains to profit taking and a slowing US economy that threatens to slash demand for autocatalysts.
The current price was well below the target of $2 500 forecast in May by Johnson Matthey, the world's largest
platinum refiner and distributor, citing output shortfalls and
strong demand.
The bulk of the world's platinum is used by automakers in
autocatalyst systems that scrub exhaust fumes of dangerous and
environmentally damaging chemicals.
The most active Tokyo platinum contract for June 2009 delivery on the Tokyo Commodity Exchange fell ¥49 per gram to ¥5 506.
New York gold futures fell $6.3 to $871.60 an ounce.
Spot palladium dropped to $342.00/350.00 an ounce from
$344.00/352.00 late in New York. Silver fell to $15.85/15.90 an
ounce from $16.14/16.23.
- Reuters
