Bloomberg News

Gold Set to Fall in New York as Europe Concern Bolsters Dollar

July 24, 2012

Gold is set to decline for a second day in New York on speculation that Europe’s debt crisis will bolster the dollar and cut demand for the metal as an alternative investment.

The euro was little changed near a two-year low versus the dollar after Spanish and Italian bond yields jumped yesterday and Moody’s Investors Service cut its ratings outlook for Germany and the Netherlands. Billionaire hedge-fund manager John Paulson was said to have told clients he sees 50 percent odds the euro will unravel.

“Gold prices are tracking the currency fluctuations,” Bayram Dincer, an analyst at LGT Capital Management in Pfaeffikon, Switzerland, said by e-mail today. “The current U.S. dollar appreciation is suppressing gold.”

Gold for August delivery fell 0.2 percent to $1,574.50 an ounce by 7:53 a.m. on the Comex in New York. Prices are up 0.5 percent this year. Bullion for immediate delivery was 0.1 percent lower at $1,575.43 in London.

Moody’s said yesterday the increasing likelihood of collective support for European countries including Spain and Italy is “adversely” affecting the Aaa credit ratings of Germany and the Netherlands. Greece’s creditors arrive in Athens today amid doubts that the nation will meet commitments attached to bailout funding.

An event causing a euro-bloc breakup may happen in three months to two years, Paulson, who runs Paulson & Co., said on a conference call yesterday reviewing second-quarter performance, according to an investor who asked not to be named because the call was private.

Silver for September delivery dropped 0.5 percent to $26.90 an ounce. Palladium for September delivery declined 1 percent to $565.30 an ounce. Platinum for October delivery was down 0.4 percent at $1,394.25 an ounce.

To contact the reporter for this story: Nicholas Larkin in London at nlarkin1@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net


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