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Gold falls as dollar rises versus euro
March 28, 2011 / 1:08 AM / in 7 years

Gold falls as dollar rises versus euro

NEW YORK/LONDON (Reuters) - Gold fell on Monday as the dollar rose against the euro, and the precious metal stayed lower even as the euro recovered in later trade because traders said the European unit’s strength seemed shaky.

<p>A gold bar is pictured during its stamping at the Austrian Gold and Silver Separating Plant 'Oegussa' in Vienna February 28, 2011. REUTERS/Lisi Niesner</p>

“Unless there are more black swan events out there, I think gold will struggle on the upside,” said Simon Weeks, head of precious metals trading at the Bank of Nova Scotia.

Spot gold, which reflects trading in bullion, was bid at $1,418.65 by 5:15 p.m. EDT (1912 GMT), down from $1,427.75 late in New York on Friday. It had recovered from a session low of $1,409.95.

U.S. gold futures for April delivery fell $6.30 an ounce to finish at $1,420.90 per ounce.

“We can fall back to $1,400, maybe even a bit below, and it still looks good overall,” said Nova Scotia’s Weeks, adding that there were still a lot of geopolitical and financial market uncertainties to support gold.

Turmoil in the Middle East, Japan’s chaotic environment in the aftermath of its earthquake and renewed concerns about unmanageable European sovereign debt were among factors underpinning gold.

The precious metal rallied to a record of $1,447.40 an ounce last week as violence in the Middle East and the euro zone’s sovereign debt concerns prompted risk-averse buying.

On Friday, a report from the U.S. Commodity Futures Trading Commission showed speculators in gold and silver futures and options increased their net long positions as prices rose last week.

“Gold’s ascent has ... been relatively orderly and volatility has remained relatively low despite higher spot prices,” UBS said in a note. “Given persistent global uncertainties, we retain our one-month forecast at $1,450 as gold should continue to fare well.”

But the Swiss banking group was as cautious as Nova Scotia in forecasting the upside potential for gold.

“Significant moves to the upside will require stronger participation by investors,” it said.

Silver also trimmed losses to trade at $37.10 announce in late business, just off $37.29 on Friday. The metal rose 6.4 percent last week on gold’s coat-tails, hitting its highest since 1980 at $38.13 an ounce.

Among other precious metals, platinum pulled into positive regions in late dealings, changing hands at around $1,737 an ounce against $1,742.45 on Friday. Palladium held near unchanged levels at around $743.

Additional reporting by Barani Krishnan in New York; Editing by David Gregorio

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