Gold slips lower as dollar firms

Saturday, November 21, 2009
LONDON: Gold slipped lower in Europe on Friday as the dollar firmed, dampening the momentum which has lifted prices more than 9 per cent this month after reports of central bank gold buying.

Spot gold was bid at $1,139.50 an ounce at 1614 GMT, against $1,143.50 late in New York on Thursday. US gold futures for December delivery on the COMEX division of the New York Mercantile Exchange fell $1.30 to $1,140.60.

India’s acquisition of 200 tons of bullion from the IMF boosted interest in gold earlier this month. The impetus from the move pushed gold through key technical resistance levels, taking gold to a record $1,152.75 an ounce on Wednesday.

The metal may be due a correction after this month’s sharp price rise, analysts said, but in the longer term it is likely to resume its climb.

“The perception is very positive now because of central banks buying gold, but they are buying it off the market. It doesn’t change global holdings of the central banks,” said Wolfgang Wrzesniok-Rossbach, head of sales at Heraeus.

“It gives some support, but I think gold has moved too much in too short a period of time. That said, it doesn’t mean there is not an underlying uptrend,” he added. “It is there, and it is intact even if gold falls to $1,075 or $1,025.”

Prices are being capped by strength in the dollar index which firmed 0.48 per cent on Friday as investors shed riskier investments. European shares fell for a fourth session, and US tocks declined.