Gold falls sharply on surging dollar

13:53, March 25, 2010      

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Gold futures on the COMEX Division of the New York Mercantile Exchange ended much lower on Wednesday, pressured by strong dollar and tumbling oil price. Sliver and platinum both dropped.

The most active gold contract for April delivery dropped 14.9 U. S. dollars, or 1.3 percent, to finish at 1088.8 dollars.

Rating agency Fitch downgraded Portugal's sovereign credit rating on Wednesday from AA to AA-, with a negative outlook, fueling growing concern about sovereign debt problems in Europe.

The rating downgrade of Portugal and worries about financial distress in the euro zone made investors flocked to the U.S. currency as a safe haven, helped lift the dollar to a 10-month high versus the euro on Wednesday.

Durable goods orders rose 0.5 percent in February, increasing for the third straight month, the U.S. Commerce Department said on Wednesday, signaled that U.S. manufacturing sector is leading the recovery.

Meanwhile, crude oil dropped on Wednesday after a report showed a gain in crude oil inventories, sparked worries about energy demand, and put downward pressure on gold.

The stronger dollar usually means weaker gold for traders purchase the precious metal as assets against dollar's depreciation.

May silver declined 38.6 cents to 16.641 dollars per ounce. April platinum was down 20.6 dollars to 1587.9 dollars an ounce.

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