Monday, July 6, 2009

Gold Slips One Percent As Dollar Eyed

. Monday, July 6, 2009

By stockOzone team

Gold prices were little changed on Tuesday, hovering below $930 per ounce as growing caution over a sustainable recovery in the global economy helped halt the dollar's fall against major currencies.

Trade was subdued in a market that had been hurt by last week's weak U.S. jobs report and awaiting fresh direction from the outcome of the G8 meeting later this week.

Spot gold inched down to $923.75 per ounce as of 0310 GMT, compared with New York's notional close of $924.00.

"Doubts over the strength of the U.S. economy increased the allure of the dollar as a safe asset and that in turn was putting pressure on gold," said Tatsufumi Okoshi, senior economist at Nomura Securities Co.

The U.S. currency edged up 0.1 percent versus the euro, moving closer to a two-week high marked the previous day.

Gold hit a two-week low of $920.10 on Monday on the back of a stronger dollar, as investors preferred the global reserve currency to bullion as a safe store of value amid fears over the economic outlook.

Bargain hunters resurfaced in India, the world's biggest bullion consumer, as gold slipped this week, but jewelers in other parts of Asia hoped for more of a price correction after bullion failed to sustain recent gains, dealers said.

Gold has retreated by more than 6 percent from a four-month high near $990 struck in early June.

"Gold is now largely at a standstill, a situation similar to other markets. That's because it is yet to be known how far to correct the overly optimistic views on the economy," Nomura's Okoshi said, adding gold may be caught in a range of $900-$950 for the time being.

U.S. gold futures for August delivery fell $0.2 to $924.10 per ounce. On Monday the contract fell $6.70 on the COMEX division of the New York Mercantile Exchange.

Non-commercial net long New York gold futures positions fell to 164,186 lots in the week to June 30 from 166,294 lots, the weekly Commitments of Traders report issued by the Commodity Futures Trading Commission showed late on Monday.

The net long positions have fallen from a peak of 189,674 lots marked in the week to June 9.

Another factor suggesting receding investor appetite, holdings by the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, fell 0.03 percent on Monday.

The holdings stood at 1,120.19 tonnes as of July 6, down 13.84 tonnes or 1.2 percent from a record 1,134.03 tonnes marked on June 1.

Disclosure: Author does not own any of the stocks discussed here.

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