Monday, Dec 01, 2008
Gold fell for the first time in three trading sessions in London as the dollar strengthened and crude oil declined, diminishing the appeal of the metal as a hedge against weakness in the U.S. currency. Platinum also plunged.
The dollar index, measuring the currency against six counterparts, rose for a second consecutive session. The relationship between gold and the euro-dollar exchange rate has strengthened this year, with a correlation of 0.6, compared with 0.53 a year earlier. A reading of 1 would mean they move in lockstep. Oil fell after OPEC deferred a decision on output.
Gold for immediate delivery dropped $25.62, or 3.1 percent, to $792.43 an ounce as of midday in London. The metal advanced 13 percent in November, the most since 1999. February futures fell $25.50, or 3.1 percent, to $793.50 in electronic trading on the Comex division of the New York Mercantile Exchange.
“The dollar appreciation weighed down on gold,” said Bayram Dincer, a commodity analyst at Dresdner Bank AG in Zurich. “It also traded in relation to the crude-oil news over the weekend as investors liquidated positions in oil and gold together.”
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Gold fell to $795.50 an ounce in the morning “fixing” in London, used by some mining companies to sell production, from $814.50 at the previous afternoon fixing.
Hedge-fund managers and other large speculators increased their net-long positions in New York gold futures in the week ended Nov. 18, according to U.S. Commodity Futures Trading Commission data. Speculative long positions, or bets prices will rise, outnumbered short positions by 64,829 contracts on Comex. Net-long positions rose by 870 contracts, or 1 percent, from a week earlier.