Saturday, January 16, 2010

Gold falls on greenback rally

January 16, 2010 - 9:43AM

Gold prices fell as the US dollar's rally sapped investor demand for the metal as an alternative asset. Palladium jumped to an 18-month high.

The greenback gained as much as 0.8 per cent against a basket of six major currencies, halting a five-session slide. Demand for the US dollar as a haven increased amid speculation that China's economy will cool following central bank steps to tighten credit. Gold has climbed 40 per cent in 12 months as the US dollar declined 8.5 per cent.

``It's the dollar move driving prices,'' said Afshin Nabavi, a senior vice president at MKS Finance SA, a bullion refiner in Geneva.

Gold futures for February delivery fell $US12.50, or 1.1 per cent, to $US1,130.50 an ounce on the Comex division of the New York Mercantile Exchange, capping a 0.7 per cent decline this week. The metal tumbled 7.3 per cent last month after reaching a record $US1,227.50 on Dec. 3.

Bullion held by the SPDR Gold Trust, the biggest exchange- traded fund backed by the metal, fell 2.13 metric tons to 1,113.75 tons as of yesterday.

Gold may gain next week as investors seek an alternative to the US dollar, a Bloomberg News survey showed. Of 19 traders, investors and analysts surveyed, 12, or 63 per cent, said the metal would rise. Five forecast a decline and two were neutral.

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