By Glenys Sim
April 28 (Bloomberg) -- Gold fell for a second day in Asia, dropping below $900 an ounce as a rally in the dollar curbed investors’ demand for the metal as an alternative investment.
Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, were at 1,104.45 metric tons for a third day yesterday. The Dollar Index, which tracks the greenback against six major trading partners, rose for a second day, after gaining as much as 1.3 percent yesterday, the most in a month.
“Investors flocked mainly into the U.S. dollar and other safe-haven currencies, rather than into gold,” HSBC Securities analyst James Steel wrote in an e-mailed note. “The subsequent rally in the U.S. dollar weighed on gold prices.”
Bullion for immediate delivery lost as much as 1.6 percent to $891.95 an ounce, and was at $898.47 at 1:41 p.m. in Singapore, extending yesterday’s 0.7 percent decline.
A retreat in crude oil also reduced gold’s appeal as a hedge against accelerating consumer prices. Crude fell for a second day on concern the swine-flu outbreak will curtail travel and stockpiles will climb as the U.S. economy contracts.
“The potential drop in air travel as nations around the world declared travel advisories against going to Mexico and even North America could reduce the demand for jet fuel, which in turn weighed on oil prices,” said Steel. “The drop in oil prices further undermined gold prices.”
The World Health Organization raised its global pandemic alert to the highest since the warning system was adopted in 2005, saying the swine flu is not containable. More than 150 people have died from flu in Mexico, where the first cases of the disease were discovered.
Among other precious metals for immediate delivery, silver dropped 1.6 percent to $12.71 an ounce, platinum lost 1.4 percent to $1,128.50 an ounce, and palladium was little changed at $226 an ounce at 1:43 p.m. in Singapore.
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
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