Results tagged “safe investment” from Capital Gold Group, Inc.
By Atul Prakash and Bate Felix
LONDON (Reuters) - Gold fell more than 2 percent in a broad commodities sell-off on Friday, with a rise in the dollar and softer oil prices dampening the metal's allure as an alternative investment.
Other key precious metals, base metals and major soft commodities traded lower, with investors pocketing profits before the end of the quarter.
Gold fell to $926.50 before rising to $933.30/934.20 an ounce at 11:40 a.m. EDT, against $951.80/952.60 in New York late on Thursday. Last week, it hit a record high of $1,030.80 an ounce before tumbling to a one-month low of $904.70.
"The market is really correcting itself, but it's a general move out of commodities. It's not just gold," said Jeremy East, head of metals trading at Standard Chartered Bank.
The market witnessed a heavy sell-off last week before rebounding on technical buying. Now it was witnessing a continuation of the downward trend, with people liquidating their positions and running for cash, East said.
"But I don't think the bullish trend is over. There is still buying interest, but in the short term the market has probably overdone on the upside. We are in a consolidation phase and gold may break back down below $900 again."
The dollar edged higher but hovered not far from record lows against the euro after U.S. data showed inflation pressures were tame in February, affirming expectations of further interest rate cuts by the Federal Reserve to boost a weakening economy.
A firmer dollar makes gold costlier for other currency holders and often lowers demand. Lower oil prices reduce the metal's appeal as a hedge against inflation.
Oil fell more than $2 to near $105 a barrel as crude flows through Iraq's pipeline system were restored after disruption by a bomb attack on Thursday.
"I would expect gold to continue bouncing around in the range of about $955 on the upside and down to about $915," said Tom Kendall, metals strategist at Mitsubishi Corporation."It's going to take until the second half of the next week before the market is going to be ready to make a more convincing push upward again."
U.S. gold futures for April delivery fell $16.6 an ounce to $932.20 -- off last week's record of $1,033.90.
LONG-TERM POSITIVE
Analysts were positive on the metal's outlook in the medium to long term.
"The sudden price pull-back across the precious metal complex during March has raised concerns that the bull run in this sector has drawn to a close. We disagree," said Michael Lewis, global head of commodities research at Deutsche Bank.
"We believe weakness in the U.S. dollar has not been exhausted and with U.S. real interest rates expected to move deeper into negative territory, we are maintaining our bullish outlook towards gold and silver prices," he said in a report.
In other metals, spot platinum rose to a one-week high of $2,040 an ounce before falling to a low of $1,980. It was last at $2,010/2,020, versus $2,023/2,033 in New York. It struck a record high of $2,290 on March 4 on supply fears driven by mining disruptions in top producer South Africa.
Platinum gained around 50 percent in 2008 after a power crisis in South Africa forced gold and platinum mines to shut down for five days in January, driving platinum prices.
But the metal, mainly used in jewelry and auto catalysts to clean exhaust fumes, tumbled to a six-week low at $1,805 an ounce last week.
Silver fell to $17.93/17.98 from $18.50/18.55 an ounce -- off a 27-year high of $21.24 hit on March 17. Palladium dipped to $439/446 an ounce from $445/450.
(Reporting by Atul Prakash; editing by Chris Johnson)
Capital Gold Group, gold, gold prices, gold demand, spot gold, platinum, spot platinum, platinum prices, silver, spot silver, silver prices, precious metals, Federal Reserve, alternative investment, safe-haven, safe investment, inflation hedge
03.27.08,
9:48 AM ETLONDON (Thomson Financial) - Gold extended earlier losses as the dollar gained ground against the major currencies on relief that the revised US GDP reading for the fourth quarter did not yield any nasty surprises.
The Commerce Department said earlier the US economy grew at a 0.6 pct annualised pace in the fourth quarter, the same rate as reported in the previous estimate.
The reading was in line with analysts' estimates, leading the dollar to extend an earlier rebound from sharp losses yesterday, and leading gold lower in turn.
Gold usually moves in the opposite direction to the dollar as it is seen as an alternative asset to the US currency. Also, a stronger dollar makes dollar-priced gold more expensive for holders of other currencies.
At 1.27 pm, spot gold was trading at 946.45 usd an ounce against 949.00 usd in late New York trade yesterday.
In other data releases, the number of first time jobless claims filed in the week ending March 22 dropped unexpectedly, falling by 9,000 to 366,000. Economists were expecting new jobless claims to total up to 370,000.
'Spot gold was quoted down 10.00 usd at 944.00 usd bid per ounce as participants deemed the US data to be dollar-positive,' said Kitco analyst Jon Nadler.
He added the 0.6 pct growth reported for the US economy in the fourth quarter was giving some participants another excuse to sell on fears that a US recession will crimp commodities demand going forward.
Commodities declined sharply last week as these fears were temporarily re-ignited. They have recovered some of their losses this week however, as funds dip back into oil, metals and gold.
Most analysts expect the recovery to continue, with gold the best placed amongst all the metals to benefit from the view that it is a safe haven asset that holds its value in times of economic turmoil.
'Given the renewed pressure on the dollar and inflationary pressures created by rising oil prices we expect gold to continue its recovery,' said TheBullionDesk.com analyst James Moore.
He added that given the likelihood of further rate cuts by the Federal Reserve, and given the ongoing financial market turmoil, he sees gold eventually establishing fresh highs above the recent record of 1,032 usd.
Elsewhere, platinum dipped to 1,992 usd an ounce against 1,994 usd, silver was down at 18.14 usd an ounce against 18.33 usd, while palladium fell to 440 usd against 454 usd.
Capital Gold Group, gold, gold prices, spot gold, jobless claims, platinum, Federal Reserve, palladium, silver, Federal Reserve rate cuts, weak dollar, falling dollar, dollar weakness, U.S. Recession, market turmoil, safe-haven, safe investment, gold demand
