Capital Gold Group Report: Gold Gains as Dollar Falls - MarketWatch

Gold for June delivery gained $5.80 to $932.80 an ounce on the New York Mercantile Exchange.

"Gold is stronger as the dollar has weakened, despite leaders of the G7 [Group of Seven] and IMF [International Monetary Fund] governing council saying they would do all in their powers to provide market stability," said Mark O'Byrne, executive director at Gold and Silver Investments Ltd., in a research note.

"Continuing worries about the health of the international financial sector has led to declines in stock markets internationally and renewed risk aversion," he said.

The dollar dropped against most other major currencies Monday, finding little lasting support from worries by the Group of Seven industrial nations about volatility in the foreign-exchange markets.

The dollar index, which tracks the performance of the greenback against a basket of other major currencies, fell 0.4% to 71.65. 

The lack of any explicit warning from the G7 about the dollar's weakness and no expectations for meaningful intervention offered little prospect that the greenback would soon end its recent run of declines against the euro, analysts said. 

On Friday, gold fell $4.80 to end at $927 an ounce, but the metal posted a gain of $13.80 on the week.

In the short term, "gold seems set to spend more time consolidating in its current range as cash generating liquidation caps the metal, while strong support is found back towards $900 an ounce," said James Moore, an analyst at TheBullionDesk.com, in a research note.

However, the long-term outlook remains positive, "as inflationary and recessionary pressures draw safe-haven demand, while the metal's strong fundamentals provide background support," he said. . . .


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