Gold Trades Near Lowest This Month on Dollar Gain Speculation

By Kim Kyoungwha

Aug. 11 (Bloomberg) -- Gold traded near the lowest this month on speculation that the dollar will continue to advance on data pointing to a recovery in the U.S. jobs market.

Bullion touched $943.50 an ounce yesterday, the lowest level price since July 31, as the Dollar Index, a six-currency gauge of the greenback’s strength, extended a rebound from a 10- month low. The U.S. economy may have bottomed out on stimulus spending, Nobel Prize winner Paul Krugman said on Aug. 9. Data last week showed the pace of U.S. job losses slowed and the unemployment rate fell for first time in more than a year.

“I don’t think the prices are firming up this week, but we wouldn’t see prices falling backward too much either,” said Gavin Wendt, a senior resources analyst with Fat Prophets Funds Management in Sydney. “At the moment the main issue is some positive data coming out of the U.S. which has a positive impact on the U.S. currency.”

Gold for immediate delivery traded up 0.1 percent at $947.63 an ounce at 3:52 p.m. in Singapore. The metal is up 7.4 percent this year.

The precious metal would receive support from an agreement among European central banks to a third five-year cap on gold sales, Wendt said.

The European Central Bank and 18 other banks agreed to sell no more than a combined 400 metric tons of the metal a year through September 2014. That’s less than the annual cap of 500 tons in the current agreement, which expires Sept. 26.

Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, fell 0.35 tons to 1,068.55 tons as of Aug. 10, according to figures on the company’s Web site.

The Dollar Index closed up 0.4 percent yesterday, rising for a third day. The gauge declined 0.2 percent to 79.109 at 3:54 p.m. Gold typically declines when the currency gains.

Among other precious metals for immediate delivery, silver was up 0.4 percent at $14.43 an ounce, platinum rose 0.1 percent to $1,251.25 an ounce and palladium was little changed at $275.75.

To contact the reporter on this story: Kyoungwha Kim in Singapore at Kkim19@bloomberg.net