Gold Price Falls Back as Dollar Strengthens
Posted on Tuesday, June 10th, 2008 | In Gold MarketsSource: Reuters 06/10/2008
Gold extended losses on Tuesday and dropped below $890 an ounce after the U.S. dollar gained on expectations of a possible interest rate hike, reducing the metal’s appeal as an alternative investment.
Gold fell to $889.80/890.70 an ounce from $894.00/896.00 late in New York on Monday, when it jumped to its highest in almost two weeks to $908.70 before slipping back as the dollar regained strength and crude oil fell. Gold was well below its record $1,030.80 hit in mid-March. Jewellery makers were on the sidelines, waiting for prices to fall further, dealers said.
“We’d expect to see very strong resistance at $900,” said Louis Lok, a dealer at Bank of China in Hong Kong, adding gold could also test the downside of $885 due to a firm dollar.
“If I were a physical buyer, this level is not low enough. Maybe at below $875 or $865,’ said Lok, referring to levels which may attract buying from jewellers and other bargain hunters.
The dollar hit a three-month high against the yen and rose against other currencies after Federal Reserve Chairman Ben Bernanke said the rise in oil prices added to inflation risks, stoking expectations for rate hikes this year…
“Short-covering and bargain-hunting should come around $880 and $16.50 for gold and silver respectively if there’s any new wave of sell-offs,” said William Kwan, bullion director of Gold Capital Management in Singapore. “But looking forward this month, a weak U.S. economy will translate to a weak U.S. dollar,” he said…
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