Monday, June 9, 2008

Gold falls as greenback strengthens

As the dollar strengthened against the euro the price of gold showed a decline in New York. Silver prices were shown to be slipping as well. The decline in gold prices seemd to indicate a loss of confidence in gold as a hedge against inflation.For the first time in five sessions the euro fell and is headed for its first quarterly decline since September 2006. As the plummeting dollar sent raw materials skyrocketing, gold climbed to a record $US1033.90 an ounce in March.''The dollar has firmed up and that's brought a little blush off the gold rally,'' said Frank McGhee, the head metals trader at Integrated Brokerage Services. ''The dollar should be free-falling and it's not.''August gold futures fell $US3, or 0.3%, to $US928.30 an ounce on the Comex division of the New York Mercantile Exchange. Earlier, gold rose as much as 0.7% as record oil prices boosted demand for the precious metal as a hedge against inflation.Gold will average $US925 in the third quarter, down from a previous forecast of $US1000, Deutsche Bank said in a report on June 27. The metal rose 0.7% in the second quarter.Silver futures for September delivery fell 20 cents, or 1.1%, to $US17.51 an ounce. The metal has advanced 17% this year, while gold climbed 11%. The euro dropped as much as 0.4% to $US1.5731 after earlier trading as high as $US1.5836. The dollar touched an all- time low of $US1.6019 against the euro on April 22.
Gold also fell after crude oil pared gains. The metal has rallied 43% in the past year as oil prices doubled. Crude futures traded as low as $US139.17 a barrel after gaining as much as 2.5% to a record $US143.67.''With crude rallying and then selling off, we're seeing some selling in gold,'' said Nick Ruggiero, a trader at Eagle Futures.
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