Nov. 25 (Bloomberg) -- Gold fell, declining for a second straight week, as a strengthening dollar eroded demand for the metal as an alternative investment.
The greenback jumped as much as 0.7 percent against a basket of major currencies on concern that the economies in Europe will worsen as leaders struggle to halt the region’s debt crisis. Italian borrowing costs increased to the highest level since 1997, while Standard & Poor’s cut Belgium’s credit rating and German Finance Minister Wolfgang Schaeuble said the European Union may adjust private-sector involvement in the permanent bailout mechanism.
“Investors are in a risk-off mode as there is no positive news out of Europe,” Fain Shaffer, the president of Infinity Trading Corp. in Medford, Oregon, said in a telephone interview. “People want to move into cash.”
Gold futures for February delivery fell 0.6 percent to settle at $1,688.50 an ounce at 12:56 p.m. on the Comex in New York. The price declined 2.1 percent this week, after dropping 3.5 percent in the previous one. Floor trading was closed yesterday for the Thanksgiving holiday.
“Precious metals are suffering under a resurgent dollar,” Marc Ground, an analyst at Standard Bank Plc, wrote in a report. “We still haven’t seen any significant physical demand coming through. This buying usually emerges below the $1,650 level, which should then limit further downside.”
Silver futures for March delivery dropped 2.7 percent to $31.092 an ounce on the Comex, down 4.3 percent this week.
On the New York Mercantile Exchange, palladium futures for March delivery dropped 3.4 percent to $572.20 an ounce, slumping 5.4 percent this week. Platinum futures for January delivery retreated 1.6 percent to $1,533.10 an ounce.
--Editors: Millie Munshi, Steve Stroth
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