Gold pares losses as dollar reverses early gains

08:50, May 13, 2011      

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Gold futures on the COMEX Division of the New York Mercantile Exchange ended moderately higher on Thursday, trimming earlier losses, as bargain hunters stepped in and the U.S. dollar reversed its early gains.

The precious metal plunged earlier in the session amid a broad- based commodity sell-off, pressured by early strength in the greenback.

The most active gold contract for June delivery added 5.4 dollars, or 0.4 percent, to 1,506.8 dollars per ounce.

The dollar continued to hike earlier in the session, as the Fed 's second round of unconventional monetary easing, known as quantitative easing 2 (QE2), will soon expire.

The strong rally in the dollar heavily weighed on dollar- denominated commodities such as gold, as it makes them more pricy for holders of other currencies.

The gold market was pressured when news reports indicated that the People's Bank of China continued its efforts to curb the country's inflation, said Mike Daly, a gold specialist with PFGbest here in Chicago.

The news "sent the gold market downward as traders sought to take profits and liquidate long positions," Daly added.

But gold and silver started to pare losses as the greenback gave up some earlier gains.

Meanwhile, the precious metal also gained some support from increasing bargain-hunting, as many investors believed the deep correction in the precious metal market has been overdone.

The news that President Barack Obama and the Republican leadership agreed the U.S. debt ceiling needs to be raised has also sent the gold market on the rise, Daly noted.

Silver for July delivery lost 71.8 cents, or 2 percent, to 34. 797 dollars per ounce. Platinum for July delivery dropped 6.8 dollars, or 0.4 percent, to 1,771 dollars per ounce.

Source: Xinhua
 
 
     
 
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(Editor:张茜)

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