By Glenys Sim
Dec. 17 (Bloomberg) -- Gold declined, reversing early gains, as the dollar’s strength eroded demand for the precious metal as an alternative investment.
The dollar rose against all of its 16 major counterparts before reports forecast to show U.S. initial jobless claims slowed and a gauge of the outlook for the world’s largest economy improved for an eighth month. The Federal Reserve said yesterday the economy is strengthening.
“In times of crisis where you don’t trust paper money, where you don’t trust the financial system, then people like the physical aspect of holding gold,” Adrian Mowat, JPMorgan’s chief Asian and emerging markets strategist, said in a Bloomberg Television interview. “As we get a recovery I think gold is going to look like a very poor asset class to own as we go into next year.”
Gold for immediate delivery dropped as much as 1.1 percent to $1,125.40 an ounce and traded at $1,128.20 at 3:30 p.m. in Singapore. Earlier it climbed as much as 0.4 percent to $1,141.88 an ounce, 6.9 percent off its record of $1,226.56 reached Dec. 3.
February-delivery bullion on the Comex division of the New York Mercantile Exchange was 0.7 percent lower at $1,127.90 an ounce after gaining as much as 0.6 percent earlier. The metal for June delivery in Shanghai slid as much as 1.1 percent to 249.62 yuan a gram ($1,137 an ounce).
Bullion is still up 29 percent this year, heading for its ninth straight annual gain, as low U.S. interest rates and increased government spending depressed the dollar. The dollar advanced as much as 0.8 percent against a basket of six major currencies, and reached a three-month high against the euro.
Among other precious metals, silver fell 1.5 percent to $17.435 an ounce, platinum slid 0.6 percent to $1,443.50 an ounce, while palladium dropped 1.2 percent to $370.50 an ounce.
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
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