Gold falls to eight-week low in London

09:31, July 21, 2010      

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Gold declined to an eight-week low in London on speculation investor demand for the metal as a protection of wealth will dampen.

The metal fell for a fifth day, the longest losing streak in almost a year, and is trading 6.9 percent below a record set last month. The dollar was 0.2 percent higher against the euro before stress-test results this week from European banks. The US currency earlier slipped to the lowest level since May 10.

"Gold's safe-haven appeal has started evaporating following a strong rebound in the euro," Andrey Kryuchenkov, an analyst at VTB Capital in London, said in a report. "Unless we see a renewed flight for safety, it is unlikely that gold would retest the June highs anytime soon."

Gold for immediate delivery lost as much as $5.97, or 0.5 percent, to $1,176.97 an ounce, the lowest price since May 24. It traded at $1,177.95 at 11:19 am in London. The metal for August delivery was 0.4 percent lower at $1,177.80 on the Comex in New York.

Bullion was little changed at $1,181.50 an ounce in the morning "fixing" in London, used by some mining companies to sell output, from $1,181 at Monday's afternoon fixing.

European regulators are examining the strength of 91 banks to determine whether they can survive potential losses on sovereign-debt holdings. Results will be released on July 23. Spanish officials including Finance Minister Elena Salgado said last week they're confident about the results of the stress tests on Spanish banks.

Gold gained with the dollar in the previous three quarters as the euro slumped 16 percent in the period against the greenback. Bullion, which typically moves inversely to the US currency, climbed to a record $1,265.30 on June 21 as investors sought to protect their wealth against the debt crisis in Greece and other European nations struggling to repay debt, and on concern that the global recovery may slow.

Moody's Investors Service cut Ireland's credit ranking one level to 'Aa2' on Monday, citing a "significant loss of financial strength" and the cost of bank bailouts.

Assets in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, were unchanged for a second day at 1,314.21 metric tons on Monday, according to the company's website. Global holdings of the metal by ETFs rose 1.6 tons to a record 2,078.1 tons yesterday, according to Bloomberg data from 10 providers.

When prices fell below $1,190 on July 16 "the buying response from the traditional physical hubs was quite significant and volumes to India were the sixth largest our sales desk in Switzerland experienced so far this year", UBS AG analyst Edel Tully said in a report. "Physical buyers are prepared to buy gold on a day when the metal experiences a large intraday negative swing."

Source:China Daily

(Editor:黄蓓蓓)

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