Gold Trades Near Lowest in More Than One Week on Oil, Dollar

By Feiwen Rong

July 23 (Bloomberg) -- Gold traded near the lowest in more than a week after crude oil tumbled and the dollar rallied, eroding the precious metal's appeal as a hedge against inflation.

Oil fell 2.4 percent yesterday on forecasts a Gulf of Mexico hurricane will miss fields. The dollar traded near a two-week high versus the euro today after Treasury Secretary Henry Paulson voiced support for the currency and the Federal Reserve Bank of Philadelphia President said interest rates should be raised.

``A combination of retreating oil, a higher dollar and recovering U.S. stocks'' brought gold lower recently, Darren Heathcote, head of trading at Investec Bank Ltd., said in a report today.

Bullion for immediate delivery was little changed at $948.04 an ounce at 10:29 a.m. in Singapore. It fell to as low as $943.72 yesterday, the lowest since July 11. Silver was little changed at $17.97 an ounce.

The dollar traded at $1.578 against the euro at the same time, after rallying to $1.5758 yesterday, the strongest level since July 10. The dollar was at 107.31 Japanese yen from 107.33 yesterday, when it climbed to 107.45, the highest since July 9.

Philadelphia Fed President Charles Plosser said in a speech yesterday in King of Prussia, Pennsylvania, that the U.S. central bank should raise interest rates ``sooner rather than later.'' He argued against cuts in two Fed decisions this year.

August-delivery gold was little changed at $948.40 an ounce in after-hours electronic trading on Comex at 10:38 a.m. in Singapore.

Gold for June 2009 delivery fell 1.9 percent to 3,298 yen a gram ($955 an ounce) on the Tokyo Commodity Exchange at the 11 a.m. local time break.

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