Bullion for immediate delivery fell as much as 0.3 percent to $1,341.75 an ounce, before trading at $1,342.45 at 12:26 p.m. in Singapore. The metal gained for the past five weeks, touching a record $1,387.35 on Oct. 14, on speculation that the Federal Reserve may ease monetary policy further, hurting the dollar.
“After a period of weakness the dollar seems to be staging some sort of a minor recovery,” said Gavin Wendt, senior resource analyst at MineLife Pty in Sydney. Shifts in the U.S. currency are the “main driver of the gold price,” Wendt said.
The greenback rose as much as 0.6 percent against a basket of six currencies today. Geithner’s comments were reported in the Wall Street Journal, which cited an interview. Bullion tends to move inversely to the dollar.
“Geithner’s comments are giving a knee-jerk boost for the dollar,” said Takashi Kudo, general manager of market information service at NTT SmartTrade Inc., a unit of Nippon Telegraph & Telephone Corp. in Tokyo.
Group of 20 finance ministers and central bankers meet in South Korea on Oct. 22-23 for talks on how to keep the global recovery on track amid concern that countries may be vying with each other to weaken their currencies. Geithner said that he’ll use the meeting to help “rebalance” the world economy to be less reliant on U.S. consumers, according to the Journal’s report.
New York Futures
Gold for December delivery in New York was little changed at $1,342.50 ounce after gaining as much as 0.9 percent yesterday. The most-active futures contract, which touched an all-time high Oct. 14, has risen 26 percent over the past year.
The greenback was at $1.3933 per euro from $1.3964 in New York yesterday, when it earlier touched $1.3698, the strongest level since Oct. 5. It climbed to 81.61 yen from 81.09 yen, after touching 80.85 yesterday, the weakest since April 1995.
Australia & New Zealand Banking Group Ltd. raised its December gold price forecast by 7 percent to $1,420 an ounce, according to an e-mailed report. The price may peak at $1,550 in the September quarter next year, the report said.
“Rising expectations that the U.S. Federal Reserve will introduce further quantitative easing paints a negative outlook for the U.S. dollar and a positive outlook for gold,” wrote Mark Pervan and Natalie Robertson, based in Melbourne. The Fed’s Open Market Committee next meets on Nov. 3.
China’s economy grew 9.6 percent in the third quarter, the smallest gain in a year, as inflation accelerated to 3.6 percent in September to the fastest pace in 23 months, according to data released today. The increase in gross domestic product from a year earlier topped economists’ median 9.5 percent estimate.
“China’s growth is very much in place and as a result of that all commodities are going to be very much in demand,” Wendt said. “The Chinese have made a strategic decision over the past year to invest more heavily in gold to diversify their foreign reserves away from the U.S. dollar and also encourage their private citizens to effectively invest in gold.”
Silver fell 0.7 percent to $23.7825 an ounce after gaining 2.5 percent yesterday. Platinum dropped 0.4 percent to $1,679 an ounce, while palladium declined 0.2 percent to $587 an ounce after reaching a nine-year high of $605.13 last week.