By Rachel Graham
Aug. 1 (Bloomberg) -- Gold dropped in London as the dollar strengthened against the euro, reducing demand for the metal as an alternative investment to the U.S. currency. Platinum fell to the lowest since January.
The dollar strengthened after a government report showed U.S. employers cut fewer jobs in July than analysts forecast, indicating the economy may be weathering the housing slump.
The gains in the dollar ``are pushing gold lower,''
Narayan Gopalakrishnan, a Geneva-based trader at MKS Finance, one of Switzerland's four bullion refiners, said by phone.
Gold for immediate delivery fell as much $11.50, or 1.3 percent, to $902.57 an ounce. The metal traded at $906.95 as of 2:08 p.m. in London. Futures for December fell $7.50, or 0.8 percent, to $915.20 an ounce on the Comex division of the New York Mercantile Exchange.
Gold is heading for a third consecutive weekly drop. The metal has also declined as oil prices weakened, reducing the appeal of the metal as a hedge against inflation.
``We've seen the dollar strengthening, which is negative for gold,'' Rodion Rahnayev, a senior dealer at trading-system operator Finotec Trading U.K. Ltd., said by phone from London. ``The sharp drop in oil'' also pushed gold lower, he said.
Gold Fields Ltd., Africa's second-biggest producer of the metal, said output will fall this quarter as it improves safety at mines following an accident that killed nine people in May.
Output in the quarter through Sept. 30 will drop 5 percent from the preceding one, the Johannesburg-based company said. That will cause one or two months' delay in the company's target to increase annual production to 4 million ounces by December.
Morning Fixing
Gold fell to $909.50 an ounce in the morning ``fixing'' in London, used by some mining companies to sell production, from $918 at the previous afternoon fixing.
Gold held in London-listed exchange-traded funds managed by ETF Securities Ltd. climbed 1.7 percent to a record 1.776 million ounces, according to
data on the company's Web site.
Platinum fell $91, or 5.2 percent, to $1,669.50 an ounce, the lowest compared with closing prices since Jan. 24.
Among other metals for immediate delivery, silver dropped 30 cents, or 1.7 percent, to $17.45 an ounce and palladium fell $16.75, or 4.4 percent, to $365.25.
To contact the reporter on this story:
Rachel Graham in London at
rgraham13@bloomberg.net
Last Updated: August 1, 2008 09:18 EDT
Linear Mode
