Gold Steadies as Dollar Restricts
Source: Reuters, Amanda Cooper (1/17/11)
"Gold stabilizes after posting a second successive weekly fall last week."
The gold price has retreated by more than 4% since the start of the year, driven lower by declining investment, renewed optimism over the U.S. economic outlook and a more robust dollar, which undercuts gold's appeal to non-U.S. buyers. Holdings of gold in the world's largest bullion-backed exchange-traded fund fell to their lowest since June 3 on Monday, while speculators cut their holdings of U.S. gold futures to their lowest since April 2010 last week.
Spot gold was last almost unchanged on the day at $1,360.50 by 1555 GMT, having touched a one-week low of $1,354.99 on Friday and having fallen by more than U.S. gold futures GCG1 which were down 0.1% at $1,359.70. With world stocks hovering at around 28-month peaks, coal prices rising after floods in major miner Australia and U.S. crude oil futures CLc1 around their highest in over two years, gold has been sidelined in favour of more risk-linked assets.
"There's been far more interest going on in things like coal, in food and even in the base metals," said Peter Hillyard, director, commodity sales at ANZ.
"Gold's been a laggard compared to the others and I think the investor community has very little going on in gold and has switched its attention to other commodities."