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Gold Falls as Dollar Climbs for Second Day; Silver Declines
UPDATE 12 Noon 06/10/08: Gold fell the most in a week as the dollar climbed for the second straight day, reducing the appeal of the precious metal as an alternative investment. Silver also dropped.
The dollar reached a three-month high against the yen and rose against the euro after Federal Reserve Chairman Ben S. Bernanke said risks to the economy have faded, spurring speculation that interest rates will rise. Before today, gold climbed 38 percent in the past year as the dollar fell 15 percent against the euro.
“The Fed has shifted their concern from economic weakness to talking about fighting inflation,” said Frank Lesh, a trader at FuturePath Trading LLC in Chicago. “Ultimately, gold is an international currency, and its biggest influence is still the dollar.”
Gold futures for August delivery tumbled $16.80, or 1.9 percent, to $881.30 an ounce at 10:37 a.m. on the Comex division of the New York Mercantile Exchange. A close at that price would mark the biggest percentage drop since May 29.
Silver futures for July delivery fell 26.5 cents, or 1.5 percent, to $16.945 an ounce. Before today, the price advanced 15 percent this year, while gold climbed 7.2 percent.
Gold rallied 39 percent from Sept. 17 to March 17, reaching a record $1,033.90, as the Fed slashed borrowing costs after a housing slump and a credit squeeze threatened to push the U.S. economy into a recession.Read Full Bloomberg Story Here
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buy silver bars | Jun 14, 2008 | Reply
Like the article says, overall silver has had a great run. In face of the long term decline in value of the dollar, precious metals are likely to stay attractive investments.