May 30, 2012 - 6:25AM
Gold declined for the first time in three sessions as the US dollar advanced on concern that Spain's financial situation is worsening, lowering the appeal of precious metals as an alternative investment.
The US dollar rose as much as 0.2 per cent against a basket of six currencies after Egan-Jones Ratings reduced its credit rating for Spain to B from BB-. The dollar has gained 4.8 per cent this month, while gold retreated 6.8 per cent.
“Gold reversed its course as the downgrade increased fears of Europe's crisis worsening,” Sterling Smith, a commodity market analyst at Citgroup's institutional client group, said in a telephone interview from Chicago. “The dollar is being favored.”
Gold futures for August delivery dropped 1.3 per cent to settle at $US1551 an ounce on the Comex in New York, the first decline for a most-active contract since May 23. Floor trading was closed on Monday for the US Memorial Day holiday.
Bullion purchases by India, the world's biggest consumer, may be about 50 metric tons to 60 tons this month, down from 102 tons a year earlier, according to Prithviraj Kothari, the president of the Bombay Bullion Association.
Silver futures for July delivery slumped 2.1 per cent to $US27.791 an ounce on the Comex.
On the New York Mercantile Exchange, platinum futures for July delivery advanced 0.1 per cent to $US1428.10 an ounce, rising for the third straight session. Palladium futures for July delivery jumped 2.4 per cent to $US606.05 an ounce, the biggest gain since April 26.
Read more: http://www.smh.com.au/business/markets/gold-drops-as-greenback-gains-20120530-1zhxj.html#ixzz1wIK5Nk4e