Gold Futures Hurt by Dollar Rebound
Posted on: Thursday, 13 December 2007, 15:00 CST
By LESLIE WINES
NEW YORK - Gold futures fell below $800 an ounce Thursday in a continuing market reaction to news that the Federal Reserve and other central banks will take major steps to ensure year-end liquidity.
"The market for the dollar is rebounding on all the actions that the Fed has taken over the past several days," said Phil Flynn, senior market analyst at Alaron Trading Corp.
"The stock market is not impressed, but the dollar is being shored up and that is hurting gold," Flynn said. "The dollar market has anticipated for some time that the Fed would take these actions. And people are now buying the dollar on the fact."
The Fed this week cut rates and unveiled a plan under which it will cooperate with four other central banks to pump money into the system to avert a year-end money squeeze, creating a better climate for the U.S. currency.
The dollar and gold in recent months have had a strong tendency to trade in opposite directions. Investors often purchase gold as a hedge against inflation and currency weakness and sell the precious metal when the dollar improves.
Gold for February delivery recently was down $19.20 at $799.60 an ounce on the New York Mercantile Exchange.
The dollar rebound sent other precious metals lower, too, with silver for March delivery falling 64.5 cents to $14.18 an ounce.
The March platinum contract gave up $11.80 to $1,468.00 an ounce and December copper lost 7.20 cents to $2.96 a pund.
On Wall Street, the Dow Jones industrial average and Standard & Poor's 500 index ell. The U.S. dollar scored gains against the yen and was a bit below its recent high versus the euro. The 10-year Treasury note's yield shot up to 4.16 percent from 4.09 percent late Wednesday.
Energy prices fell on the Nymex, giving back much of a sharp rise seen the day before. Light, sweet crude oil futures for January delivery fell $1.63 to $92.76 a barrel. January gasoline futures dropped 2.93 cents to $2.3835 a gallon.
Futures for wheat, corn, oats and soybeans traded higher Thursday on the Chicago Board of Trade.
Wheat for March delivery rose 3.5 cents to $9.44 a bushel; March corn rose 2.5 cents to $4.3575 a bushel; March oats rose 1.5 cents to $2.96 a bushel; January soybeans rose 2.5 cents to $11.54 a bushel. .
Source: Associated Press/AP Online
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