By Debarati Roy and Maria Kolesnikova
Jan. 5 (Bloomberg) -- Gold futures fell from a two-week high as
the dollar’s rally curbed demand for the metal as an alternative asset.
The euro slumped against the greenback after
Greek Prime Minister Lucas Papademos warned that his country may face
economic collapse as soon as March, and France’s debt costs climbed.
Gold’s correlation with the 17-nation currency is the highest since
March 2010, data compiled by Bloomberg show.
“Concerns that the European crisis is worsening
is taking the sheen off gold,” Frank McGhee, the head dealer at
Integrated Brokerage Services LLC in Chicago, said in a telephone
interview. “We could see gold trade weak short term.”
Gold futures for February delivery declined 0.3
percent to $1,607.70 an ounce at 10:19 a.m. on the Comex in New York.
Earlier, the price reached $1,626.80, the highest for a most- active
contract since Dec. 21, partly because of physical demand in Asia.
The metal climbed 4.7 percent in the previous
three sessions. In the fourth quarter, futures dropped 3.4 percent,
snapping a rally since the end of 2008.
“Euro weakness is putting pressure on gold,” said
Ole Hansen, a vice president of trading advisory at Saxo Bank A/S in
Copenhagen. “We are at the beginning of a new year, so traders are
lacking strong conviction, leaving room for these markets to be
volatile. Bullion still trades as a risky asset.”
Silver futures for March delivery fell 0.5
percent to $28.945 an ounce on the Comex. Yesterday, the metal slumped
1.6 percent.
--With assistance from Maria Petrakis in Athens. Editors: Patrick McKiernan, Steve Stroth
To contact the reporters on this story: Debarati Roy in New York at
droy5@bloomberg.net;
Maria Kolesnikova in London at
mkolesnikova@bloomberg.net
To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net
