Finotec News Archive - August 30 2007
Gold Decline After USD Advances Against EUR
Gold fell after a gain in the value of the dollar reduced the appeal of the precious metals as alternative investments.Rodian Rahnayev 
30 August 2007
Print this article
Subscribe to RSS
Gold fell after a gain in the value of the dollar reduced the appeal of the precious metals as alternative investments.
Gold generally moves in the opposite direction of the U.S. currency, which rose the most against the euro in two weeks before paring gains. Gold has climbed 5.6 percent this year while the dollar has dropped 3.3 percent against the euro. ``The dollar strength is keeping gold down,'' said Marty McNeill, a trader at R.F. Lafferty Inc. in New York.
Rising Treasuries helped bolster the dollar as investors shunned riskier assets on concern losses related to U.S. subprime mortgages will widen. The dollar traded at $1.3646 per euro, compared with a record low of $1.3852 on July 24.
``Investors are questioning everything,'' McNeill said. ``Right now, they're going to sacrifice better yields for safety. Instead of speculating on gold, they'll go to Treasuries.''
Speculative long positions, or bets gold prices will rise, outnumbered short positions by 68,930 contracts on the Comex in the week ended Aug. 21, according to U.S. Commodity Futures Trading Commission data. That's the lowest level since July 9.
``If the stock market is trading negatively, investors will try to raise cash wherever they can, so we'll see a liquidation in the metals,'' said Tom Hartmann, a commodity broker at Altavest Worldwide Trading Inc. in Mission Viejo, California.
The Dow Jones Industrial Average fell as much as 0.8 percent today before rebounding. Gold touched a six-week low on Aug. 16 as losses tied to U.S. subprime mortgages sent stocks lower.
Finotec Analysis Team
30 August 2007
Print this article