Gold Drops in Asia as Stronger Dollar Curbs Investment Demand
Jan. 30 (Bloomberg) -- Gold dropped as the strengthening dollar eroded the appeal of the metal as an alternative investment, prompting some investors to reduce their bets on a price rise before the end of the month.
The dollar rose as much as 0.6 percent versus the euro after advancing 1.6 percent yesterday, the biggest gain since Jan. 9. Bullion typically moves in the opposite direction to the U.S. currency. Before today, gold added 3 percent in January, gaining for the third straight month.
“The dollar’s played its part,” Darren Heathcote, head of trading at Investec Bank Ltd. in Sydney, said today by telephone. “It’s probably helping to cut a little bit on the top side ahead of the weekend.”
Bullion for immediate delivery fell as much as 0.6 percent to $902.91 an ounce and traded at $904.28 at 10:04 a.m. in Singapore. The price rose 2.4 percent yesterday as a slide in U.S. equity markets sparked demand for the metal as a store of value.
Gold for February delivery was down 0.1 percent at $904.20 in after-hours electronic trading on the Comex division of the New York Mercantile Exchange, while gold for December delivery on the Tokyo Commodity Exchange gained 2.2 percent to 2,604 yen a gram ($905 an ounce).
Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, has remained at a record 832.9 metric tons since Jan. 26.
“It’s a very clear reflection that investors are still keen to hold onto gold,” Heathcote said. “Demand from investor’s perspectives is increasing as we are getting more uncertainty again in the market, or returning of uncertainty.”
Equities Decline
The S&P 500 dropped 3.3 percent after government reports showed U.S. durable goods orders fell for a fifth month in December and the number of Americans receiving unemployment benefits jumped to a record in mid-January, raising speculation that the recession will deepen.
The dollar headed for its largest monthly gain against the euro since October on speculation growing evidence of a global slowdown will increase the appeal of the currency to investors as a haven. The U.S. currency traded at $1.2919 as of 10:13 a.m. in Singapore from $1.2954 late yesterday in New York.
Among other precious metals for immediate delivery, silver fell 0.5 percent to $12.3050 an ounce after gaining 3 percent yesterday, platinum lost 1.2 percent to $963.50 an ounce, and palladium was 0.5 percent lower at $193.50 an ounce.
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