Gold Falls for Second Day as Dollar Strengthens Against Euro

By Feiwen Rong

July 1 (Bloomberg) -- Gold fell for the second day in Asia as the U.S. dollar strengthened against the euro and crude oil pared gains, eroding the appeal of the precious metal as an alternative investment.

The U.S. currency advanced against the euro from a three- week low on speculation its longest decrease since mid-March was too much to sustain. The dollar is down 13 percent in the past year against the euro while bullion has gained 41 percent. Crude oil is 2.3 percent down from its record $143.67.

``The gold price was influenced by the trends in the U.S. dollar and oil prices,'' David Moore, commodity strategist at Commonwealth Bank of Australia in Sydney, said in a report today. ``The gold price fluctuated within a relatively narrow range last night, peaking above $935 an ounce before slipping lower.''

Bullion for immediate delivery fell 0.2 percent to $923.90 an ounce at 9:49 a.m. in Singapore. Silver was little changed at $17.41 an ounce.

Crude oil futures traded in New York were up 0.3 percent at $140.36 a barrel at 9:47 a.m. Singapore time after falling to as low as $139.17 a barrel yesterday.

Hedge-fund managers and other large speculators increased their net-long position in New York gold futures in the week through June 24, according to U.S. Commodity Futures Trading Commission data.

Speculative long positions, or bets prices will rise, outnumbered short positions by 153,538 contracts on the Comex, the Washington-based commission said in its Commitments of Traders report. Net-long positions rose by 2,348 contracts, or 2 percent, from a week earlier.

Gold for August delivery fell 0.3 percent to $925.60 an ounce in after-hours electronic trading on Comex at 9:51 a.m. Singapore time.

Gold for June 2009 delivery was little changed at 3,185 yen a gram ($932 an ounce) on the Tokyo Commodity Exchange at 10:51 a.m. local time. Gold for December traded in Shanghai was down 0.4 percent at 204.42 yuan a gram ($927 an ounce).

To contact the reporter for this story: Feiwen Rong in Singapore at frong2@bloomberg.net