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June 06, 2008
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Friday
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Jamadi-us-Sani 01, 1429
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Gold slips to 3-week low
LONDON, June 5: Gold slips to a three-week low on Thursday as the dollar reached its strongest level in three weeks against the euro and a three-month high against the yen.
Spot gold dipped to $870.00/871.00 an ounce from $878.30/879.70 an ounce late in New York on Wednesday, having earlier slipped to an intraday low of $868.50 - its lowest level since May 15.
This is definitely dollar-based, said BNP Paribas analyst David Thurtell. Generally people are really starting to reassess the outlook for the dollar. The precious metal tends to move in the opposite direction to the dollar, as it is often bought as a hedge against weakness in the U.S. currency. old is more of a currency hedge than any other commodity, said Thurtell.
A higher US currency makes dollar-denominated metals more expensive for holders of other currencies.
Gold is also being pressured by oil as it slips from the all-time high it struck last month. The precious metal tends to trade in line with crude prices, as it is bought as a hedge against oil-led inflation.
Gold has softened this week as the dollar gained against the major currencies after Federal Reserve Chairman Ben Bernanke expressed concern over inflation.
The market is now eyeing this afternoon’s rate setting decision by the European Central Bank, which could impact the currency markets.
The ECB is widely expected to leave rates unchanged at 4.0 per cent, a 6-1/2 year high. Overall the market expects rates to be held (by the ECB) and we could see a bit of a dollar rally post-rate decision, said James Moore, an analyst at TheBullionDesk.com.
Traders are also eyeing Friday’s non-farm payrolls data, which is expected to give fresh direction to the dollar and therefore to precious metals.
Among other precious metals, spot platinum eased to $1,970/1,980 an ounce, from $1,985/$2,005 an ounce late in New York on Wednesday. Silver edged down to $16.62/16.69 an ounce from $16.81/16.87 an ounce, and spot palladium dipped to $420.50/428.50 an ounce from $425.00/433.00.—Reuters
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