Gold Futures Fluctuate in New York; Metal May Climb Should Dollar Decline
Aug. 5 (Bloomberg) -- Philip Manduca, head of investment at ECU Group Plc, talks about his investment strategy for currencies and gold. He speaks with Maryam Nemazee on Bloomberg Television's "The Pulse." (Source: Bloomberg)
Gold prices fell in New York after the dollar rebounded, eroding the appeal of the precious metal as an alternative investment.
The dollar rose as much as 0.3 percent against the euro, bouncing back from the lowest level in three months. Gold reached a record $1,266.50 an ounce on June 21.
“Gold is a dollar trade now,” said Matt Zeman, a metals trader at LaSalle Futures Group in Chicago. “Look for prices to go higher if the dollar weakens. If we see a stronger dollar, gold will have a difficult time.”
Gold futures for December delivery fell $2, or 0.2 percent, to $1,193.90 at 11:43 a.m. the Comex in New York. The metal rose to $1,202.80 earlier and is up 24 percent in the past year.
Earlier, the dollar declined as much as 0.6 percent against the euro as the European Central Bank kept its main interest rate at 1 percent.
“We are seeing resurgent interest from the investor community,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. Gold prices have been “benefiting from a tumbling dollar and a rebound in riskier assets.”
The U.S. Federal Reserve has kept its benchmark lending rate between zero and 0.25 percent since December 2008 to spur growth.
“Obviously, the Fed can’t lower interest rates lower than zero,” Zeman said. “That’s going to continue to weaken the dollar and give the metal a boost.”
Access to Trading
China, the world’s biggest gold producer and second-largest buyer after India, said on Aug. 3 that it would let more banks import and export bullion and allow foreign companies more access to trading.
Silver futures for September delivery rose 2.2 cents, or 0.1 percent, to $18.3 an ounce on the Comex.
Platinum futures for October delivery fell $15.70, or 1 percent, to $1,570.50 an ounce on the New York Mercantile Exchange. Palladium futures for September delivery lost $6.05, or 1.2 percent, to $494.10 an ounce.
To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.
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