Gold fell in London as the dollar rose against the euro, boosting the allure of the metal as an alternative to the US currency. Silver and palladium dropped. |
Gold maintained a correlation of 0.7 with the euro-dollar last month, according to Bloomberg data, climbing to a record $1,032.70 an ounce as the dollar slumped. A correlation of 1 would mean gold and the euro moved in lockstep. |
"The recovery in the dollar at this point is just corrective,'' said Robin Wilkin, London-based head of commodities and currency technical analysis at JPMorgan Chase & Co. "There is still the risk of a deeper correction into the $850-$825 over the next few days. The longer term bull trend in gold is ongoing.'' |
Gold for immediate delivery fell $7.72, or 0.9 per cent, to $896.63 an ounce by 11:56 am in London. Gold for June delivery was unchanged at $900.40 an ounce on the Comex division of the New York Mercantile Exchange. |
The metal also rebounded after declining yesterday for the first time in a week as the dollar slipped following Federal Reserve Chairman Ben S. Bernanke's statement that the U.S. may fall into recession. |
"Perceptions of how much more the dollar will weaken will be key for gold in the short term,'' said Simon Toyne, a mining analyst at Numis Securities Ltd. |
"The dollar has already weakened a lot, US interest rates have been cut substantially, the key is how much lower can the dollar go.'' |
Silver for immediate delivery slid 19.5 cents, or 1.1 per cent, to $17.16 an ounce. |
The metal, which reached a record of $20.81 on March 5, will probably recover to around $21 an ounce by the end of this year, said James Moore, an analyst at TheBullionDesk.com. |
Palladium fell $2, or 0.5 per cent, to $439 an ounce and platinum rose $11, or 0.6 per cent, to $1,963 an ounce. |