DJ Europe Precious Metals: Gold Lower As Dollar Recovers
12/08/2004
Dow Jones News Services
(Copyright © 2004 Dow Jones & Company, Inc.)
LONDON (Dow Jones)--Spot gold in Europe is lower Wednesday midday from the earlier morning fix, coming under continued pressure from the dollar's recovery.
At 1223 GMT spot gold stood at $444.30 a troy ounce, down from the morning fix at $445.75/oz.
The slide continued a sharp selloff during Asian trade from above $450/oz, kickstarted by the dollar's impressive recovery against the basket of major currencies.
At 1228 GMT the euro stood at $1.3305, up $0.0113 on the day, a move which makes dollar-denominated gold less competitive to non-US investors.
"We had been expecting a bounce for the dollar and that in itself has translated into a retracement for gold," an analyst said.
The bulk of the selling was said to have seen long position holders booking profits and if the dollar continues to strengthen against the euro then this liquidation is expected to pick up pace considerably.
Physical buying has helped to temper the downward momentum but with the market looking technically overbought there is a chance of a fall back to the next support level at $440/oz, said a dealer.
But much will depend on the direction of the dollar.
Concerns have been raised that the rally for the euro against the dollar has also been overextended to the upside and some foreign exchange analysts are expecting a deep correction is likely in the short term.
This would mean gold would remain under pressure, especially as some traders will be keen to square their, mostly long, positions ahead of the year-end.
But not everyone is bearish with some dealers expecting a test of major resistance at $460/ton before the year end.
Silver has also been hit by the dollar's recovery against the euro and has fallen sharply overnight to a low of $7.44/oz Wednesday morning basis spot.
Some support has been found around this level but analysts have not ruled out a slide back to the next support level at $7.30/oz over the next few days.
Platinum has tracked gold and silver lower and has also bowed to pressure from the stronger dollar, hitting an intraday low of $854.50/oz Wednesday morning.
While the losses have dented sentiment, consumer buying interest is expected to offer support at the current lower levels.
Palladium managed to hold steady around $206/oz, having already fallen steadily over the last few weeks.
(Prices in dollars a troy ounce)
Wednesday AM Fix Tuesday PM Fix
Gold 445.75 451.80
Platinum 856.00 868.00
Palladium 206.00 206.00
-By David Elliott; Dow Jones Newswires; (4420) 7842 9411; david.elliott@dowjones.com
(END) Dow Jones Newswires
12-08-04 0750ET
