Gold News & Info

Source: Bloomberg

New York— Gold prices fell for the first session in four in New York as the dollar strengthened against the euro after a Treasury Department report showed foreign investors bought U.S. assets at a faster pace in June.

The dollar gained the most against the euro in more than three weeks. Gold rose for the fourth week in a row last week, partly as the dollar dropped against the euro, increasing the precious metal's appeal as an alternative investment, some traders said.

“The dollar was moving down for a couple of weeks, and that helped gold have a pretty good run,'' said Frank Lesh, a trader and analyst at Rand Financial Services Inc. in Chicago. “The dollar-euro is the big influence.''

Gold futures for December delivery fell $3.80, or 0.8 percent, to $447.60 an ounce on the Comex division of the New York Mercantile Exchange. A futures contract is an obligation to sell or buy a commodity at a set price by a specific date.

Investors outside the U.S. bought a net $71.2 billion of U.S. Treasuries, corporate bonds, stocks and other financial assets in June, up from a revised $55.8 billion in May, the Treasury Department said today in Washington.

Gold may fall to $442 to $445 an ounce, Lesh said. Prices climbed 1.9 percent last week and have gained 7 percent in the past month.

Gold vs Dollar

Gold sold in dollars has moved almost in lockstep with the euro's fluctuations against the U.S. currency in the past two years at a correlation coefficient of 0.81. The maximum reading is 1. The coefficient measures to what degree two variables move in unison. Prices reached a 16-year high of $458.70 in December as the dollar fell to a record against the euro.

“When the dollar is firming, and everything else is equal, gold gets sold off,'' said Michael Martin, a trader and analyst at R.F. Lafferty & Co. in New York. Still, gold will probably rise by year-end as its appeal as an alternative asset increases, he said.

Gold may rise this week on speculation record oil and gasoline costs will boost the appeal of the metal as a hedge against inflation, a Bloomberg survey showed. Futures surged to $873 an ounce in 1980, when U.S. consumer prices rose more than 12 percent from the previous year.

Twenty-nine of 50 traders, investors and analysts surveyed Aug. 11 and Aug. 12 from Melbourne to New York advised buying gold, which last week rose to $451.40 an ounce, an eight-month high, on the Comex. Fifteen recommended selling the metal, and six were neutral.