Gold falls after hitting a 2-week high, dollar gains

LONDON: Gold fell in New York with stocks and oil after reaching a two-week high yesterday and as a stronger dollar curbed demand for bullion as an alternative investment.


Bullion reached the highest since December 18 on Wednesday after US lawmakers passed a bill averting automatic spending cuts and tax increases, heading off the so-called fiscal cliff.

The US Dollar Index, a gauge against six counterparts, rose to the highest since December 11 on Thursday, on speculation policy makers will struggle to reach an agreement to raise the US debt limit.

“It is fiscal cliff euphoria hangover we are seeing this morning and gold is following the more negative sentiment,” said Filip Petersson, a commodities strategist at SEB AB in Stockholm.

“We have passed peak fiscal cliff optimism, the focus is now likely to move away from the quick fix towards tough negotiations over the coming months.” Gold for February delivery fell 0.7% to $1,677.50 an ounce by 7:35 am on the Comex in New York.

Gold for immediate delivery fell 0.6% to $1,677.15 an ounce in London. “Safe havens are punished in an environment where market risk appetite is improving,” Deutsche Bank analysts Michael Lewis and Christina McGlone wrote in a report, referring to near-term threats for gold prices.

“The second hazard could be a turn in the US dollar.” Bullion ended 7% higher in 2012, rising for a 12th year, as central banks from the US to China took steps to stimulate their economies.




Bank of Japan Deputy Governor Kiyohiko Nishimura will speak on Friday amid speculation of more asset purchases to end deflation in the third-largest economy.

Gold may reach $1,900 an ounce as “central bankers everywhere continue to debase their currencies and the financial markets prove treacherous,” Byron Wien, chairman of Blackstone Group’s advisory services unit, said in his annual “10 Surprises” list, published since 1986.

Silver for March delivery fell 0.4% to $30.88 an ounce. Assets in exchange-traded products backed by the metal were at an all-time high of 18,956.03 tonne on January 2. Platinum for April delivery gained 0.2% to $1,571.50 an ounce, while palladium for March delivery fell 0.7% to $703 an ounce.