Gold off 10-week high, focus on dollar

LONDON - Gold prices slipped on Friday but remained within sight of a 10-week high, with dealers watching movements in the dollar for short-term direction.

By (Reuters)

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Published: Fri 20 Jul 2007, 5:43 PM

Last updated: Sat 4 Apr 2015, 10:21 PM

A further weakness in the currency, which hovered near record lows against the euro, might lift gold to new highs but a recovery in the dollar might prompt profit-taking and push the metal towards $640 an ounce, dealers said.

“I am cautious as recent gains have been made purely on a dollar weakness. The price movement is not artificial, but too much dependence on one factor is not healthy,” said Matthew Turner, precious metals analyst at Virtual Metals.

“Gold will be driven by the dollar, but if the currency doesn’t move, then it might come back on profit taking.”

Gold eased to $676.40/677.05 an ounce by 1011 GMT from $677.30/678.10 late in New York on Thursday, when it rallied to as high as $677.50 an ounce on a weaker dollar.

The dollar hovered near a record low against the euro on lingering worries about the U.S. housing market.

The U.S. currency limped after Federal Reserve Chairman Ben Bernanke on Thursday said losses on subprime loans could hit $100 billion and threaten consumer spending.

A weaker dollar makes gold cheaper for other currency holders and often lifts bullion demand. The metal is also generally seen as a hedge against oil-led inflation.

“While gold has not been racing higher, the metal has still notched up steady gains this week, which should continue in the week ahead as both oil and the dollar look set to continue their recent trends,” said James Moore, analyst at

Oil steadied near $78 a barrel, but remained within sight of its all-time peak, supported by concern that rising demand will strain supplies already thinned by U.S. refinery glitches and output disruptions in Africa.

In other precious metals, platinum has been supported by wage negotiations in South Africa, the world’s largest producer, as well as an expected drop in sales by Lonmin Plc, the world’s third-biggest platinum producer.

“The price action in platinum is unrelenting and ... the market will likely continue to push higher while there is significant uncertainty around the South African mining situation,” J.P. Morgan Securities said in a daily note.

Platinum hit a two-month high of $1,325/1,329 an ounce, versus $1,320/1,325 in New York, while silver rose to a one-month high of $13.31 before easing to $13.26/13.30 an ounce, against $13.24/13.29 an ounce. Palladium was flat at $369/372 an ounce .

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