Gold Reverses Losses on Weaker USD
Source: The Wall Street Journal, Matt Day (7/14/10)
"Weakness in the dollar enhanced gold's appeal."
The most actively-traded contract, for August delivery, rose $2.90 to $1,216.40 an ounce on the Comex Division of the New York Mercantile Exchange.
Large investment funds boosted the price of gold and other commodities Wednesday, buying on continued weakness in the dollar, said Frank Lesh, broker and analyst with FuturePath Trading in Chicago.
The dollar was weaker against some major currencies Wednesday after a drop in U.S. June retail sales, and Lesh said investors took the opportunity to buy gold futures that were still trading below their recent highs. Gold futures have an added link to the dollar, as a weaker greenback makes the purchase of dollar-denominated futures cheaper for investors using other currencies.
The most active gold contract has not closed above $1,215 an ounce since ending at $1,245.90 on June 30. The next day, gold plunged in a rout across markets on weak U.S. economic data, and gold since has traded in a steady range near $1,200.
Prices had found support recently from physical buyers each time they neared the lower end of the trading range, but the interest faded as prices rose, said Suki Cooper, precious-metals analyst with Barclays Capital in London.
The metal's rise to record highs in May and June was supported by the combination of support from gold investment funds and a rush of haven-seeking purchases as disappointing economic data raised doubts about the viability of the economic recovery, Cooper said.