News // Metal market
Gold lower on strong dollar
17 November 2010 , 13:30Reuters1616
Euro zone finance ministers agreed on Tuesday to lay the groundwork for bailing out Ireland's banking sector with the IMF, but said Dublin had to decide itself whether to request the aid.
The dollar hit seven-week highs against the euro as a result.
"In the short term, the Ireland crisis may weigh on gold because it is boosting the dollar," said Hou Xinqiang, an analyst at Jinrui Futures in China. "But if going forward it spilled over to other nations and caused concerns on the health of the entire euro zone economy, that would help
Spot gold fell 0.3 percent to $1,335.74 an ounce by 0725 GMT, extending a two percent fall in the previous session.
U.S. gold futures edged down 0.2 percent to $1,335.30.
Gold may head down further to $1,330, or even lower after it broke below a key support level around $1,350, analysts and traders said.
"It (Ireland) is probably an excuse to offload the heavy long positions that have been built in the past couple of months," said a Hong Kong-based trader.
But uncertainties in the global economic recovery and worries over inflation down the road will continue to attract investors to gold.
"Short-term looks a bit soft, but it still hasn't derailed the medium- and long-term bullish sentiment. Since the market is heavily one-sided, it won't be a surprise to see continuous
The Relative Strength Index on spot gold, used to measure trade interest, fell to 44.39, its lowest since early August.
Hong Kong's gold flow into mainland China in the first nine months of the year more than doubled from a year earlier, suggesting robust demand for the metal, official Hong Kong
CHINA TIGHTENING FEAR
Speculation is mounting that China may step up policy tightening to curb inflation, after October's reading hit a 25-month high.
"The market has shifted from anticipation on inflation to expectations on measures to fight inflation," Hou of Jinrui Futures said. "That's why we have seen a broad sell-off in commodities."
Amid talks of an imminent interest rate hike and the government's pledge to control food price rise, a number of commodities traded on China's exchanges, including soybean, soyoil, copper and zinc, fell by their daily limit.
Spot platinum fell to a seven-week low of $1,624, before recovering to $1,632.99.
Spot palladium declined to a two-week low of $630.22.
Platinum group metals are set to continue to thrive in 2011 as a tightening of the metals' underlying fundamentals keeps sentiment upbeat, metals refiner Johnson Matthey said in a
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