Gold Set for Worst Run Since 1999 as Dollar Strengthens
Gold is seen declining for the first time in three days in London on speculation Europe’s debt crisis will drive investors to the dollar, curbing demand for the metal as an alternative asset.
The dollar traded near a 22-month high versus the euro today as concern Europe’s turmoil is hurting economic growth boosted demand for the greenback. Gold imports by India may fall as much as 51 percent this month as a weaker rupee and higher duties increase prices, the Bombay Bullion Association said.
“Whether it’s Greece leaving the euro or Spain being next in line for a bailout, investors are focusing on the crisis in Europe at the moment and picking the dollar as their haven of choice,” said Sun Yonggang, an analyst at Everbright Futures Co., a unit of China’s largest state-owned investment group.
Bullion for immediate delivery fell 0.2 percent to $1,577.25 an ounce by 9:14 a.m. in London. Prices are 5.3 percent lower in May for a fourth monthly decline, the longest losing run since 1999. August-delivery futures were 0.5 percent higher at $1,578.30 on the Comex in New York. U.S. markets were closed yesterday for Memorial Day.
Gold is up 0.9 percent this year after 11 consecutive annual increases. Bullion purchases by India may be about 50 metric tons to 60 tons this month, down from 102 tons a year earlier, Prithviraj Kothari, president of the Bombay Bullion Association, said today in a phone interview.
Consumer confidence in the euro area was at minus 19.3 in May, compared with minus 19.9 in April, according to a Bloomberg News survey before the final reading is released tomorrow.
The unemployment rate climbed to 11 percent in April, the highest in data compiled by Bloomberg going back to 1990, according to a separate survey of economists before the June 1 report.
Silver for immediate delivery rose 0.4 percent to $28.5175 an ounce. Palladium was little changed at $605.88 an ounce. Platinum was little changed at $1,439.25 an ounce.
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