Gold Futures Prices Dip 1% as Dollar Extends Run
Source: MarketWatch, Claudia Assis and Steve Goldstein (3/22/10)
"The move comes on the heels of China tightening its own monetary and lending policies"
Gold for April delivery fell $11 to $1,096.50 an ounce at the New York Mercantile Exchange, below the $1,100-an-ounce mark the yellow metal had managed to hold for the past three weeks. Gold for May delivery lost $10.60 to $1,097.60 an ounce.
The strength of the greenback, which has been rising against the euro on worries about Greek government debt, and concerns about rising interest rates in India and elsewhere pressured commodities across the board. Oil dipped below the important $80-a-barrel level and recently traded down 0.6% at $80.21 a barrel.
The SPRD Gold Trust (GLD) fell 0.8%. The ETF has gained 1.2% in the last three months and nearly 15% in the past 12 months.
On a day light for U.S. economic data, commodities markets focused on the prospects that rising global interest rates this year would curb demand for raw materials. India, one of the world's top gold-buying nations, on Friday raised interest rates, aiming at keeping ahead of inflation.
"The move comes on the heels of China tightening its own monetary and lending policies," MF Global said in a research note Monday. Investors in recent days have also debated the prospects the Federal Reserve would raise its discount rate again, analysts noted.
Gold's Monday dips came on the heels of a 2% decrease on Friday, in the largest one-day sell-off since Feb. 4. Gold prices settled at $1,107.60.
Gold prices may brace for another round of euro weakness this week, as Greece "may decide to go to the (IMF) on their own accord should they not receive a financial package from the (EU)," MF Global analysts said.