| Gold up as dollar weakens { June 2007 } Original Source Link: (May no longer be active) http://www.forbes.com/markets/feeds/afx/2007/07/13/afx3911943.htmlhttp://www.forbes.com/markets/feeds/afx/2007/07/13/afx3911943.html
AFX News Limited Metals - Gold rises in London as dollar hits new record low against euro UPDATE 07.13.07, 10:50 AM ET
(Updates prices, adds details)
LONDON (Thomson Financial) - Gold prices rose in London as the dollar fell to a new record low against the euro in the wake of a dismal US retail sales report that showed consumer spending plunged in June amid the ongoing housing crunch.
The Commerce Department said retail sales in June recorded their biggest fall since a August 2005. The data disappointed analysts, who were expecting a rise in sales as a result of falling auto purchases.
'The weaker than expected retail sales really underlines the downside risk to the ... US economy, and that's prolonging the upside prospects for gold,' said Ashraf Laidi, an analyst at CMC markets.
At 2.27 pm, spot gold was quoted as 667.30 usd an ounce, compared with 655.40 before the data's release. The metal was quoted at 666.90 usd in late New York trades yesterday.
The dollar hit a new record low against the euro of 1.3801 usd, from 1.3775 usd just before the data release. Against the pound the greenback sank to 2.034 usd, from 2.032.
Weakness in the US currency typically supports gold, which is seen as an alternative investment to the currency.
'Positioning and a weak dollar underpin our view that gold and silver should trade higher over the next few months, despite a relatively poor physical demand environment - soft for seasonal reasons,' said UBS (nyse: UBS - news - people ) Investment Bank analyst John Reade.
Yesterday, gold rose to a 5 week high of 669.05 usd amid record dollar weakness and as a rally in oil to fresh 11-month peaks increased the metal's appeal as a hedge against inflation.
Oil prices have extended yesterday's 11 month peaks today, further underpinning gold as they creep ever closer to their all time record of 78.65 usd a barrel struck last August.
'Ongoing price strength in the oil market is an important component to stronger gold prices,' said James Steel, an analyst at HSBC (nyse: HBC - news - people ).
'Ongoing violence in the Middle East and reports of strong physical demand in the Far East and the US for refinery products are supporting oil and also gold prices.'
Among other precious metals, platinum was little changed at 1,312 usd per ounce against 1,313 usd in late New York trades yesterday.
Its sister metal palladium eased to 365 usd against 368 usd yesterday, while silver was largely flat at 13.07 usd per ounce against 13.08 usd.
jan.harvey@thomson.com
ma/ejp//cmr
COPYRIGHT
Copyright AFX News Limited 2007. All rights reserved.
|
|