Sunday, May 25, 2008

Gold slips on dollar rise, but oil supports

Gold prices dipped lower as the dollar rose from its one month low. Spot silver and other precious metals followed gold's lead.

"Gold is not showing any particular propensity to move either way at the moment. There's some key economic data out this week which will have an influence on gold's direction," said Daniel Hynes, metals strategist at Merrill Lynch. "Until we get a better feel of the short term outlook, it's going to be rangebound. Gold has really struggled to push above the $925 mark and when it has, it's been sold off pretty well."

The euro's one-month high against the dollar has also slipped, a sign of consumer concerns that the euro zone economy is beginning to show cracks. Investors are also awaiting new data this week from the Federal Reserve expecting a clearer picture of the US economy. However, the rise in oil prices due to North Sea production issues and a Nigerian pipeline explosion are keeping fears of inflation high and have halted falling gold bullion prices.

"Volatility looks set to remain high in the coming days, with the dollar and oil to continue providing much of the metals intra-day direction," James Moore, analyst at said in a report.

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