Gold Poised for First Weekly Drop in Five; Platinum Advances

By Jae Hur

Jan. 9 (Bloomberg) -- Gold fell as the dollar gained against the euro and after oil declined, curbing the metal’s appeal as an alternative investment. Platinum gained for a seventh day on improved demand prospects, heading for a fifth weekly advance.

Bullion fell as the prospects of a European Central Bank rate cut pressured the euro, bringing the dollar’s gain to 2 percent this week, as the precious metal declined 2.3 percent. Crude oil has fallen 8.7 percent as rising unemployment in the U.S. spurred concern the recession will cut fuel demand, curbing the appeal of bullion as an inflation hedge.

“The dollar and oil prices have been setting the direction for gold,” Tatsuo Kageyama, an analyst at Kanetsu Asset Management Co. in Tokyo, said today by phone. “Gold prices will remain in a range before the U.S. job data later today.”

Gold for immediate delivery fell 0.3 percent to $855.04 an ounce at 2:02 p.m. in Tokyo after gaining 1.7 percent yesterday. Bullion is poised for the first weekly decline in five weeks. Silver for immediate delivery was up 0.3 percent at $11.15 an ounce.

The euro fell, snapping two days of gains, on speculation the ECB will lower rates next week. Bundesbank President Axel Weber yesterday signaled that Germany’s central bank may have to revise down its 2009 growth forecast for the nation. The euro traded at $1.3648 at 2:04 p.m. in Tokyo from $1.3702 late yesterday in New York.

The U.S. unemployment rate likely jumped in December to 7 percent, the highest level since 1993, according to the median forecast of 70 analysts surveyed by Bloomberg News. Non-farm payrolls probably fell by 525,000 last month, according to the survey. The Labor Department is scheduled to release the data at 8:30 a.m. in Washington.

Crude oil rose 1.4 percent to $42.29 a barrel in electronic trading on the New York Mercantile Exchange.

Indian Demand

Immediate-delivery platinum rose 0.8 percent to $1,001 an ounce at 2:41 p.m. Tokyo time. It earlier traded as high as $1,001.50 an ounce on speculation demand from India will rise. The metal, which is used in pollution-control devices in vehicles, has advanced 5.7 percent this week.

The 14-day relative strength index for platinum, a gauge of momentum, has risen above 70 since Jan. 6, signaling prices may fall. The metal reached $1,005.50 on Jan. 7, the highest since Oct. 15. Palladium for immediate delivery gained 0.3 percent to $197.25 an ounce.

“Indian jewellers yesterday stated they have launched a new platinum series of jewellery due to low prices,” said Akhilesh Kamkolkar, head of futures at Halifax Investment Services in Sydney. “Supply outlook is also not looking good for platinum which will also push prices higher.”

December-delivery gold on the Tokyo Commodity Exchange added 0.8 percent to 2,516 yen per gram ($858 an ounce) and December- delivery platinum was up 0.3 percent at 2,930 yen a gram.

To contact the reporter on this story: Jae Hur in Tokyo at jhur1@bloomberg.net