Gold snaps 3-day rally as dollar rebounds

09:08, May 12, 2011      

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Gold futures on the COMEX Division of the New York Mercantile Exchange edged lower, ending a three- day winning streak on Wednesday, pressured by newly-gained strength in the greenback and investors' profit-taking. Meanwhile, the sharp losses in energy market also helped drag down the precious metals.

The most active gold contract for June delivery lost 15.5 dollars, or 1 percent, to 1,501.4 dollars per ounce.

A trader mentioned that the strong rally in the dollar as well as the fact that cautious investors chose to book in some profit after gold's 3-day rally both served as major catalysts driving down the precious metals' prices.

The dollar index, which measures the greenback's performance against a basket of six rival currencies, further hiked on Wednesday, eroding gold's appeal as an alternative asset.

Meanwhile, the weaker energy prices also attributed to another mammoth sell-off in the precious metals markets, after government data showed rising U.S. crude oil and gasoline inventories.

The sharp losses in crude oil price prompted traders to scramble to liquidate position in the precious metals market, as they have been spooked by last week's major market correction.

"The tension in the precious metals remains high as traders and investors alike are exiting positions quicker to book profits when available," said Mike Daly, a gold specialist with PFGbest here in Chicago.

Silver for July delivery plunged 2.971 dollars, or 7.7 percent, to 35.515 dollars per ounce. Platinum for July delivery dropped 23. 1 dollars, or 1.3 percent, to 1,777.8 dollars per ounce.

Source: Xinhua
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