Gold heads for first weekly drop in a month
Gold fell in London, heading for the first weekly drop in a month, after manufacturers sold more used metal to capitalize on a rally and a stronger dollar discouraged investor purchases.
Manufacturers have increased scrap gold sales this week after prices rose to a four-month high on April 12, said Bernard Sin, head of currency and metals trading at bullion refiner MKS Finance SA in Geneva.
Gold has dropped 0.6pc this week as the dollar rebounded against the euro, curbing demand from investors seeking an alternative investment.
“Looking at the weakness in the euro, a lot of people are looking for gold to dip before jumping in with buying,” Sin said by phone today. “Jewelry demand other than in China is also weaker.”
Gold for immediate delivery dropped $4.70, or 0.4pc, to $1,154.55 an ounce at 8:56am local time. The metal this week touched $1,170, the highest intraday price since December 4.
Bullion for June delivery declined 0.4pc to $1,155.20 on the Comex in New York.
The dollar rose for a second day against the euro, adding as much as 0.4pc on demand for a haven fueled by prospects that Greece will struggle to rein in the euro region’s widest budget deficit. Bullion climbed to a record high against the euro on April 9.
“Gold is down because of the dollar’s strength,” said Wallace Ng, head of precious metals with Fortis Nederland NV in Hong Kong. “That doesn’t mean the trend has changed. The retreat in metals is viewed as a temporary correction.”
Gold may rise next week as signs of climbing producer prices spur demand for the precious metal as a hedge, according to 11 of 20 traders, analysts and brokers surveyed by Bloomberg, or 55pc. Four people expected a decline and five were neutral.
“You can’t be positive or negative,” said Ghee Peh, head of Asian mining research with UBS Securities Asia Ltd in Hong Kong. “At the moment, gold is definitely not a safe haven because things are not that bad and there’s no inflation.”
Silver for immediate delivery fell 0.4pc to $18.34 an ounce, platinum declined 0.2pc to $1,716.10 an ounce and palladium slid 0.5pc to $542.20 an ounce.