Tuesday, April 22, 2008

Gold Prices Decline

Gold fell on Tuesday prompting investors to turn their back on the precious metal ahead of this week’s Federal Reserve meeting on interest rates.

Gold prices usually follow the rise or declne of the dollar. This is because gold is so often used as an alternative investment to currencies, stocks and bonds. The Fed meeting will set the tone for monies, gold and other precious metals, said dealers.

Gold fell to $887.50/888.50 an ounce late in New York on Monday. This happened when gold hit a mid day high of $895.50 an ounce due to speculative buying driven by record high oil.

“Everybody is waiting for the Fed,” said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong. “I think gold has to stay above these levels before it can charge higher again. The range is still the same at between $880 to $900 for today and tomorrow.”

Gold was still trading well below a lifetime high of $1,030.80 an ounce. People have started to sell their gold because of a weakening euro. Falling oil prices also triggered some selling. Weaker oil prices reduced gold’s appeal as a hedge against inflation.

Gold futures for June delivery on the COMEX division of the New York Mercantile Exchange fell $6.0 an ounce to $889.5 an ounce.

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