Gold Futures Little Changed in New York, Erasing Gains as Dollar Rebounds

Gold futures were little changed, erasing earlier gains, as the U.S. dollar rebounded from lows, making the metal less attractive as an alternative investment.

The dollar recovered to be little changed against a basket of six major currencies, after losing as much as 0.8 percent earlier today. Bullion typically moves inversely to the greenback. Gold has gained 25 percent this year as investors lost confidence in currencies and sought to protect their wealth from debt woes in Europe.
“Given the nervous environment and in the absence of more broad-based physical support, gold may have further room to the downside if the dollar continues to strengthen and Treasury yields rally,” UBS AG London-based analyst Edel Tully said in a report.

Futures for February delivery were little changed at $1,370.90 an ounce on the Comex in New York at 7:21 a.m., after gaining as much 0.5 percent earlier today. The precious metal has fallen 1 percent this week. Gold for immediate delivery was little changed at $1,370.35 an ounce in London, after gaining as much as 0.6 percent earlier. The metal touched $1,361.39 in London yesterday, the lowest price since Nov. 29.

“If there were stronger signs of physical demand from the traditional sources, we would be less apprehensive about the prospect for further liquidation, but with the holiday period and year-end drawing nearer, investors will be increasingly tempted to square up positions,” Tully said.

London ‘Fixing’

Bullion rose to $1,374.75 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,363 at yesterday’s afternoon fixing.

Gold assets in exchange-traded products fell 1.87 metric tons to 2,097.83 tons yesterday, according to data compiled by Bloomberg from 10 providers. Holdings reached a record 2,104.65 tons on Oct. 14. The metal is headed for a 10th annual advance and futures reached an all-time high of $1,432.50 an ounce on Dec. 7.
Futures may have fallen through price levels that triggered automated sell orders, said Bayram Dincer, an analyst at LGT Captial Management in Pfaeffikon, Switzerland. That may create a buying opportunity for those who are bullish, he said by e-mail.

Silver for March delivery lost 0.2 percent to $28.735 an ounce on the Comex. The metal has surged 71 percent this year, outperforming gold. Silver holdings in ETPs gained for a sixth straight day, adding 0.94 metric ton to 15,172.49 tons yesterday, the highest amount since at least February, data from four providers showed.

Palladium for March delivery fell 0.7 percent to $737.50 an ounce on the New York Mercantile Exchange. Platinum for January delivery dropped 0.1 percent to $1,697 an ounce.

To contact the reporter on this story: Sungwoo Park in Seoul at spark47@bloomberg.net; Tony C. Dreibus in London at tdreibus@bloomberg.net.

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