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Monday, May 16, 2011

Gold May Decline as Dollar Gains Ahead of EU Meeting on Greece

Gold May Decline as Dollar Gains Ahead of EU Meeting on Greece : Gold may decline for a second day in London trading as the dollar advanced amid concerns that Europe’s debt woes will worsen.

Greece today will plead for a boost to its 110 billion-euro ($155 billion) bailout from European governments and the International Monetary Fund in talks clouded by the arrest of IMF Managing Director Dominique Strauss-Kahn. The U.S. dollar gained as much as 0.3 percent against a basket of six currencies to the highest level in more than a month.

“The main reason for prices falling is the uncertainty about the financial bailout for Greece, which is putting pressure on the euro,” Commerzbank AG analyst Eugen Weinberg said in a report today.

Immediate-delivery gold gained as much as 0.2 percent and fell as much as 0.5 percent before trading $2.85 lower at $1,492.18 an ounce by 11:42 a.m. in London. Gold futures for June delivery declined 0.2 percent to $1,490.30 on the Comex in New York. Spot silver lost as much as 3.9 percent to $34.04 an ounce and last traded at $34.1612 an ounce in London.

Gold declined to $1,495 an ounce in the morning “fixing,” used by some mining companies to sell output, from $1,505.75 at the afternoon fixing on May 13.

The euro fell as much as 0.5 percent against the dollar today, and rose as much as 0.2 percent. Gold typically moves inversely to the greenback.

Bullion also declined after Touradji Capital Management LP sold all of its shares in the largest exchange-traded fund backed by bullion.
Exchange-Traded Products

Gold assets held in exchange-traded products declined 9.19 metric tons to 2,040.78 tons on May 13, according to data compiled by Bloomberg.

Eleven of 16 traders, investors and analysts surveyed by Bloomberg, or 69 percent, said bullion will rise this week. Three predicted lower prices and two were neutral.

“There is still a lot to fret about here for an average investor who remains tense over debt troubles in the monetary union and will think twice about getting out of those gold longs in the near term,” VTB Capital analyst Andrey Kryuchenkov said in a report today.

Gold has gained 5 percent this year after a 30 percent jump in 2010 as the prospect of currency debasement and accelerating inflation drove up investor demand. Europe’s debt crisis and fighting in the Middle East also contributed to the rally, spurring haven demand.

“With the outlook for PGMs blemished by the disruption in the global auto sector supply chain and silver continuing to trade in extremely volatile conditions, we expect investors will look increasingly toward gold to hedge systemic financial risk,” Morgan Stanley analysts led by Hussein Allidina said in a report today, referring to platinum-group metals.

Immediate-delivery palladium was little-changed at $708 an ounce, while platinum fell 0.3 percent to $1,759.57 an ounce. (source http://www.bloomberg.com/news/2011-05-16/gold-may-decline-as-dollar-gains-ahead-of-eu-meeting-on-greece.html) For the latest updates PRESS CTR + D or visit Stock Market news Today

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