Gold may drop after biggest gain
Tuesday, 25 August 2009
LONDON, Aug. 24 (Bloomberg): Gold, little changed in Asian trading, may decline after the biggest rally in three weeks spurred investors to sell the precious metal.
Bullion typically moves inversely to the dollar and gained 1.4 per cent on Aug. 21 as a decline in the Dollar Index, a six- currency gauge of the greenback's value, increased the metal's appeal as a hedge against inflation. The Index, along with rising stocks, may support gold, said Hwang Il Doo, a trader with KEB Futures Co.
"After a big rally in the previous session, caution set in among market players," said Seoul-based Hwang. "Still, should the dollar continue to drop and Asian stocks rise, the downside for gold is limited."
Gold for immediate delivery dropped as much as 0.3 per cent before trading little changed at $953.95 an ounce at 2:22 p.m. in Singapore. The Dollar Index lost 0.1 per cent to 77.987, while the MSCI Asia Pacific Index of regional shares rose 2.5 per cent.
Gold holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, added 0.9 metric tons to 1,066.41 tons as of Aug. 21, expanding for the first time since July 16, according to figures on the company's Web site.
Meanwhile, ETF Securities Ltd., a U.K. based financial company began selling precious metal linked exchange-traded funds on the Tokyo Stock Exchange today.
Bullion typically moves inversely to the dollar and gained 1.4 per cent on Aug. 21 as a decline in the Dollar Index, a six- currency gauge of the greenback's value, increased the metal's appeal as a hedge against inflation. The Index, along with rising stocks, may support gold, said Hwang Il Doo, a trader with KEB Futures Co.
"After a big rally in the previous session, caution set in among market players," said Seoul-based Hwang. "Still, should the dollar continue to drop and Asian stocks rise, the downside for gold is limited."
Gold for immediate delivery dropped as much as 0.3 per cent before trading little changed at $953.95 an ounce at 2:22 p.m. in Singapore. The Dollar Index lost 0.1 per cent to 77.987, while the MSCI Asia Pacific Index of regional shares rose 2.5 per cent.
Gold holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, added 0.9 metric tons to 1,066.41 tons as of Aug. 21, expanding for the first time since July 16, according to figures on the company's Web site.
Meanwhile, ETF Securities Ltd., a U.K. based financial company began selling precious metal linked exchange-traded funds on the Tokyo Stock Exchange today.