Gold, Little Changed, May Rise in Asia as Dollar, Oil Steady

By Glenys Sim

July 7 (Bloomberg) -- Gold, little changed in Asia, may gain from a two-week low as crude oil stemmed a decline and the dollar rally halted.

Bullion fell to $920.75 an ounce yesterday, the lowest since June 23, as oil led a drop in commodities on concern the global economic recovery will falter, damping demand for the precious metal as an inflation hedge.

“In the near term, gold will trade in a wide $880 to $980 range as concerns swing between inflation and deflation,” Lin Haoxiang, analyst at Guotai Junan Securities, said from Shanghai today. “Gold’s day-to-day moves will still be broadly influenced by the U.S. dollar.”

Gold for immediate delivery traded at $925.98 an ounce at 8:43 a.m. in Singapore. Gold for August delivery on the Comex division of the New York Mercantile Exchange was at $925.90.

Oil, which has dropped 10 percent in the past week, traded near a five-week low on concern a protracted economic slump will curb fuel consumption. The dollar was little changed for a second day after gaining 0.6 percent against a basket of six currencies last week. A rising U.S. currency cuts the attraction of raw materials priced in dollars.

“A broad-based retreat in commodity prices augurs negatively for gold prices,” HSBC Securities analyst James Steel said in a note. “If the pace of global activity remains slow and deflationary fears are rekindled, then gold prices may remain under pressure.”

Among other precious metals for immediate delivery, silver gained 0.5 percent to $13.33 an ounce, platinum rose 0.7 percent to $1,156.75 an ounce and palladium added 0.2 percent to $242.50 an ounce as of 8:47 a.m. in Singapore.

To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net