Gold slips on oil
Gold slipped below $US900 an ounce again today, under pressure from a stronger US dollar that helped push oil lower and weakened bullion's appeal both as an anti-inflation tool and an alternative currency.
Spot gold was quoted at $US897.15/898.15 an ounce in early European trading, down from $US899.65/901.05 an ounce late in New York on Wednesday.
"A firmer dollar and weaker oil are two negatives for gold. So gold could easily underperform oil,'' said Mark Pervan, senior commodities analyst with ANZ.
"If oil falls 3-4% this week, gold could fall 4-5%,'' Mr Pervan added, predicting that gold prices could fall to $US880 an ounce by the end of this week, and $US850 next week before bottoming out.
Gold has already fallen more than $US35 an ounce from last week's $US935.30-high, which was its highest in a month, and came after oil hit an all-time peak of $US135.09 a barrel.
The US dollar rose on Thursday, clawing back toward a two-week high hit in the previous session after better-than-expected US durable goods orders eased concerns about the US economic outlook.
The stronger US dollar also added a bearish tone to oil prices, which have failed to reach new records for a week as several developing nations in Asia have cut subsidies, possibly prompting a drop in Asian energy demand.
Front-month US crude for July delivery was down 47 cents at $US130.56 a barrel on the Globex electronic trading platform.
Gold tends to move in line with oil prices as dearer crude boosts bullion's appeal as a hedge against inflation.
"I am expecting a lower gold market on oil prices. But on the other hand, demand for physical gold will be higher because of lower spot gold,'' said Ellison Chu, senior manager at Standard Bank London in Hong Kong.
"Physical demand was a bit slow last week. But it is better now with gold prices lower'', Ms Chu said, adding that demand from most Asian buyers, such as Indonesia, was on the rise.
Gold futures for June delivery on the COMEX division of the New York Mercantile Exchange were down $US3.50 an ounce at $US897 an ounce.
