Gold Climbs in London; Weaker USD, Decline Lures Buyers

Source:

"Physical buyers should keep the market supported above $1,000."

Gold gained in London, paring a third weekly decline, as a halt in the dollar's rally prompted investors to buy bullion after the metal's biggest drop in almost two weeks.

Bullion yesterday fell below $1,100 for the first time since Nov. 10 and dropped 3.4%, the most since Dec. 4, as the U.S. Dollar Index rose to a three-month high. The index, a six-currency gauge of the greenback's value, was little changed after falling as much as 0.4% today. Gold has dropped 9.8% since climbing to a record $1,226.56 an ounce on Dec. 3.

"The fall yesterday below $1,100 an ounce is an attractive level for some bargain hunters," said Peter Fertig, owner of Quantitative Commodity Research Ltd. in Hainburg, Germany. "Gold is recovering as the dollar has given back some of its gains made over the last few days,"

Gold for immediate delivery added $7.50, or 0.7%, to $1,106.40 an ounce at 1:28 p.m. local time. The metal is down 0.8% this week. Bullion futures for February delivery on the New York Mercantile Exchange's Comex unit were little changed at $1,107.20 an ounce.

"We're seeing quite a bit of buying interest, including physical demand, after the big drop yesterday," said Wallace Ng, chief dealer at Fortis Bank's commodity-derivatives unit. "There was a bit of panic selling as people jumped out of everything else into the dollar" yesterday, he said. "Physical buyers should keep the market supported above $1,000."

Weekly Decline

Gold is set for a third weekly decline as the dollar index has added 1.5%, heading for a third weekly increase. Bullion typically moves inversely to the U.S. currency.

Bullion is still up 25% this year, heading for its ninth straight annual gain, as low U.S. interest rates and increased government spending depressed the dollar.

Related Articles

Get Our Streetwise Reports Newsletter Free

A valid email address is required to subscribe