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DJ PRECIOUS Gold 1649.00, Silver 31.41 Looks To Dollar, Stocks For Direction
Apr 16, 2012 By Tatyana Shumsky Of DOW JONES NEWSWIRES

--Comex June gold down 0.2% at $1,656.40/oz
--ICE Dollar index near flat as greenback under pressure from other currencies
--Stocks climbs, boosting gold

NEW YORK (Dow Jones)--Gold futures pared losses Monday as the dollar struggled against other currencies and as equity markets moved higher.

The most actively traded contract, for June delivery, was recently down $3.80, or 0.2%, at $1,656.40 a troy ounce on the Comex division of the New York Mercantile Exchange.

Gold had touched a low of $1,642.00 a troy ounce overnight, but prices shook off these losses as the U.S. trading day drew near.

"We anticipate gold physical buying to come to the fore should gold dip below $1,640," said analysts at Standard Bank.

Currency markets are playing an active role in setting the direction of gold prices. Gold strengthened as the dollar lost ground against a basket of international currencies. The ICE US dollar index was recently near flat at 79.923.

Earlier in the morning, the euro had slumped close to the $1.30 mark against the dollar.

"That development certainly did not help gold," said Jon Nadler, senior metals analyst with Kitco Metals Inc. North America in a note to clients.

Gold futures are priced in dollars and seem less expensive to investors using other currencies when the greenback weakens.

The Standard & Poor's 500 stock index stepped higher, recently up 0.5% at 1376.77. Gold and stocks have been moving in the same direction for much of the past six months, raising questions about gold's role as a safe harbor from economic uncertainty and as a hedge against risky assets like stocks.

The 20-day average correlation between gold futures and the S&P500 was recently at +0.28, on a scale where +1 means a perfect direct relationship.

-By Tatyana Shumsky, Dow Jones Newswires; 212-416-3095; [e-mail]
(END) Dow Jones Newswires
04-16-12 1006ET

http://news.tradingcharts.com/futures/8/8/177039188.html