Gold turns lower on monetary tightening worries

By Frank Tang and Maytaal Angel

NEW YORK/LONDON (BestGrowthStock) – Gold turned lower on Monday, retreating from a one-month high earlier in the session, as uncertainty about monetary tightening and currency volatilities took a toll on investor sentiment.

Signs that the U.S. Federal Reserve could unwind more economic stimulus programs also dampened bullion’s inflation hedge appeal.

Renewed worries about Greece’s ability to repay its debt also increased choppiness in the euro. (USD/: )

Bruce Dunn, vice president of trading at New Jersey-based Auramet, said gold was pressured by the Fed’s surprise hike in discount rates — emergency borrowing rates for banks — and Greece news.

“There is so much uncertainty that people don’t know what to expect,” he said.

Spot gold was at $1,115.20 an ounce by 3:08 p.m. EST (2008 GMT), down from $1,117.50 at New York’s late quote on Friday. Earlier in the session, it hit a one-month high of $1,130.65.

Bullion was about 8 percent below an all-time high above $1,200 an ounce struck in early December and but still well above a three-month low around $1,043 hit almost three weeks ago.

U.S. April futures settled down $9 at $1,113.10 an ounce on the COMEX division of NYMEX.

The dollar held gains against the euro due to reports that Germany has made no decision on aid for Greece.

A stronger dollar weighs on gold as it dents the metals appeal as an alternative to the U.S. currency. It also makes dollar-priced gold costlier for non-U.S. investors.

Gold priced in euros traded at about 819, off last week’s record of around 830 euros.

Gold, sometimes bought as a safe haven asset and hedge against financial uncertainty, has been moving in line with risk appetite and assets perceived as riskier, such as equities.

Currency markets took the Fed’s surprise decision to raise its discount rate last week as a signal the U.S. central bank was coming closer to raising its benchmark rate.

Profit-taking increased after a weekly trade report by the U.S. Commodity Futures Trading Commission showed that the net long positions by noncommercial users, or speculators, increased 4 percent.

“A lot of financial market participants are long, so there’s still profit to be taken,” said Tobias Merath, analyst at Credit Suisse.


Last week’s news that the International Monetary Fund would shortly begin selling 191.3 tonnes of gold in the open market under a previously approved program also dent sentiment.

Investors await Fed Chairman Ben Bernanke’s twice-yearly testimony to U.S. Congress and the U.S. gross domestic product data later this week for further clues on rate policy, and also further clues on the U.S. economy.

In other precious metals, silver was at $16.22 an ounce versus $16.27, platinum was at $1,525 versus $1,530 and palladium was at $439, up from its previous finish at $437.00.

Close Change Pct 2009 YTD

Chg Close % Chg US gold 1113.10 -9 -0.8 1096.20 1.5 US silver 16.222 -0.191 -1.2 16.845 -3.7 US platinum 1531.90 -11.70 -0.8 1471.00 4.1 US palladium 442.10 -0.25 -0.1 408.85 8.1

Prices at 3:32 p.m. EST (2032 GMT) Gold 1114.60 -2.90 -0.3 1096.35 1.7 Silver 16.21 -0.06 -0.4 16.84 -3.7 Platinum 1522.00 -8.00 -0.5 1465.50 3.9 Palladium 439.00 2.000 0.5 405.50 8.3

Gold Fix 1115.25 -4.50 -0.4 1104 1.0 Silver Fix 16.44 49.00 3.1 16.99 -3.2 Platinum Fix 1535.00 2.00 0.1 1466 4.7 Palladium Fix 441.00 1.00 0.2 402 9.7

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(Reporting by Frank Tang and Maytaal Angel; Editing by Marguerita Choy)

Gold turns lower on monetary tightening worries