Gold fell and platinum declined from a record in London on expectations that a stronger dollar may erode demand for precious metals as alternatives to stocks and bonds. | |
| Gold has declined 4.2 per cent in the past four days, the biggest drop since December 1, on speculation lower US interest rates will buoy the US economy and support the dollar. |
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| The 14-day relative strength index for gold at about 52 won't signal a buy until it drops closer to 20, said Lehman Brothers Holdings Inc. analyst Michael Widmer in London. |
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| "The moving averages have also turned against gold," Widmer said. "All of the precious metals seem to be moving down together and the dollar is one factor." |
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| Gold for immediate delivery dropped $12.17, or 1.4 per cent, to $891.40 an ounce as of 11:21 am in London and earlier fell to $888.07, the lowest since January 23. The dollar rose 1.1 per cent to $1.4675 per euro, the biggest jump in two weeks. |
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| "It appears that the dollar is strengthening and it appears that gold has a good deal to fall to the downside,'' Dennis Gartman, a gold trader and editor of the US-based Gartman Letter, wrote in his daily report on Tuesday. The metal may drop as much as $85 an ounce, according to Gartman. |
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| Platinum fell $28.50, or 1.6 per cent, to $1,769.50 an ounce, after earlier rising to $1,812.75, the highest ever. |
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| New York platinum futures closest to delivery are more expensive than contracts for later months from July until October, a condition known as backwardation. This encourages companies to increase supplies. Backwardation ``is rare for the precious metals,'' Gartman wrote. |
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| Platinum has led gains in precious metals this year, rising 16 per cent on reduced production in South Africa, the world's biggest producer of the metal. |
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| Gold has climbed 6.9 per cent this year, palladium is up 12 per cent and silver has gained 12 per cent. The UBS Bloomberg Commodity Index of 26 raw materials is up 5 per cent over the same period. |
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| Silver for immediate delivery dropped 15 cents, or 0.9 per cent, to $16.535 an ounce in London. Palladium for immediate delivery fell $10.75, or 2.5 per cent, to $414.75 an ounce. Palladium is often mined with platinum and is also used in auto catalysts and jewelry. |
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