Gold May Rise for 2nd Day in London as USD's Rally Stalls
Source: BusinessWeek, Kim Kyoungwha and Nicholas Larkin (2/26/10)
"Spot prices. . .are set for a 2.8% gain this month, the first rise in three."
Greece may have its sovereign debt rating lowered within months if it fails to meet the objectives in its plan to reduce its budget deficit, Moody's Investors Service said yesterday. The dollar fell as much as 0.6% against the euro after yesterday climbing to near a nine-month high. Gold, down for the first week in three, typically moves inversely to the greenback.
"The eurozone scenario is still lingering in the market," said Bernard Sin, head of currency and metals trading at gold refiner MKS Finance SA in Geneva. "People don't trust the dollar; they don't trust the euro, so the only way to go is to look at other alternatives such as gold. It's a safe haven."
Gold for immediate delivery added $4.70, or 0.4%, to $1,111.05 an ounce at 11:37 a.m. local time. The metal is down 0.7% this week. Bullion for April delivery was 0.3% higher at $1,111.30 on the New York Mercantile Exchange's Comex unit.
The metal increased to $1,112.50 an ounce in the morning "fixing" in London, used by some mining companies to sell production, from $1,094.50 at yesterday's afternoon fixing. Spot prices, which reached a record $1,226.56 on Dec. 3, are set for a 2.8% gain this month, the first rise in three.
The impact of a strong dollar "is being offset by some of the continued sovereign debt downgrade concerns in Europe," said Ben Westmore, Sydney-based analyst with National Australia Bank. "As a safe-haven property, investors are buying gold more than selling it based on the U.S. dollar strength."