Gold, Silver Decline as Rising Dollar Reduces Appeal of Bullion June 19 (Bloomberg) -- Gold in Asia fell as a rising dollar reduced the appeal of the metal as an alternative investment. Silver also declined.
The dollar rose to an eight-week high against the yen and climbed versus the euro on speculation Federal Reserve Bank of Atlanta President Jack Guynn will be upbeat about U.S. economic growth in a speech today. Gold has risen 11 percent this year as the dollar fell 6.4 percent against the euro.
``Gold is trading around the exchange rate at the moment,'' Gerard Burg, a minerals economist at National Australia Bank Ltd., said by phone in Melbourne. ``The gold price is just volatile at the moment, but we expect it to break higher later as investors' demand for gold is still high.''
Gold for immediate delivery fell as much as $13.38, or 2.3 percent, to $567.78 an ounce. The metal, which has fallen 22 percent since touching a 26-year high of $730.40 on May 12, traded at $572.26 at 12:49 p.m. Mumbai time.
Silver for immediate delivery, which has fallen 34 percent since reaching a 23-year high of $15.20 on May 11, fell as much 38 cents, or 3.7 percent, to $9.90 an ounce. It traded at $10 an ounce at 12:49 p.m. Mumbai time.
The U.S. currency rose to 115.65 yen at 10:42 a.m. in Mumbai and reached 115.78, the highest since April 21, from 115.19 yen in New York on June 16. It also advanced to $1.2585 against the euro from $1.2643.
The U.S. currency may add to its 3.6 percent gain against the yen and its 1.6 percent advance versus the euro in the past month as improving economic growth may attract capital to U.S. assets. A report this week may show corporate orders for new equipment rebounded last month, suggesting consumer demand is recovering.
Spot Price
Spot gold fell on concern rising interest rates will make it more expensive to buy gold. The metal has risen for five straight years, the longest winning streak since the 1970s, partly on expectations the dollar will weaken.
U.S. Federal Reserve officials are set to meet June 29 to discuss interest rate policy. The central bank has raised its benchmark rate 16 times since June 2004 to 5 percent.
Guynn is set to speak about the U.S. economic outlook to the Georgia Bankers Association in Naples, Florida, at 9:30 a.m. local time. Federal Reserve Bank of St. Louis President William Poole on June 16 said U.S. inflation is too high, and it may need to act, suggesting interest rates gains are on the cards.
Gold for August delivery fell as much as $10.20, or 1.75 percent, to $571.50 an ounce in after-hours trade on the Comex division of the New York Mercantile Exchange. The contract traded at $574.30 at 12:14 p.m. Mumbai time.
Jewelry Demand
Gold demand fell 16 percent in the first quarter as prices at 25-year highs deterred purchases by jewelers, the biggest buyers, the producer-funded World Gold Council said last month.
Gold may gain in the next quarter, after recent price falls and as jewelers need to stock up in preparation for the wedding season in India, and for Christmas shopping, said Gavin Wendt, a resources analyst at Fat Prophets Ltd., in Sydney.
``In the last two quarters, we've seen a tremendous drop in jewelry buying because of higher prices,'' said Wendt. ``As the market establishes a base gold price, you'll see more significant buying.''
In India, the world's biggest gold consumer, gold prices for August delivery fell 123 rupees, or 1.4 percent, to 8,605 rupees per 10 grams, or 26,761 rupees ($583) per ounce, at 12:16 p.m. on the Multi Commodity Exchange of India Ltd. in Mumbai.
``There are few buyers as market remains very volatile,'' Ravi Jalan, director at New Delhi-based Jalan Commodities, said. ``Gold may find support around $550 level.''
(20min delay)