Gold Heads for Third Weekly Decline on Dollar Gains, Oil Loss

By Iris Leung and Glenys Sim

Aug. 1 (Bloomberg) -- Gold fell in Asia, heading for a third weekly decline, as a stronger dollar and falling energy prices curbed demand for an alternative investment.

Dollar-denominated gold tends to move in the opposite direction to the U.S. currency. Bullion fell 1.2 percent in July as the dollar gained 1 percent against the euro and 1.6 percent against the yen.

``The underlining factors are still oil prices and the dollar.'' said Mark Pervan, senior commodity strategist at Australia & New Zealand Banking Group Ltd. in Melbourne. ``There are also signs of confidence returning to the equity market, which is not good for gold,'' he said by phone today.

Bullion for immediate delivery fell as much as 0.4 percent to $910.13 an ounce, and traded at $910.47 at 1:48 p.m. in Singapore. Silver for immediate delivery slipped 0.5 percent to $17.655 an ounce.

The dollar traded at $1.5569 against the euro, compared with $1.5603 late yesterday in New York, and was at 107.59 yen from 107.91 yen.

Gold also dropped as crude oil futures capped the biggest one-month decline since December 2004 yesterday. Crude oil for September delivery was at $123.39 a barrel, down 69 cents, at 1:48 p.m. Singapore time on the New York Mercantile Exchange.

Gold for June delivery on the Tokyo Commodity Exchange dropped 20 yen to 3,176 yen a gram ($918 an ounce) at 1:53 p.m. Singapore time.

December-delivery gold on the Comex division of the New York Mercantile Exchange was down $3.50, or 0.4 percent, at $919.20 an ounce in after-hours electronic trading.

Bullion for December delivery on the Shanghai Futures Exchange fell to 201.61 yuan a gram ($917 an ounce).

To contact the reporters on this story: Iris Leung in Hong Kong at Ileung7@bloomberg.netGlenys Sim in Singapore at gsim4@bloomberg.net;