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News // Metal market

Gold Falls More Than 1%

17 November 2008 , 09:43Jo Amey732
Gold dropped more than 1percent on Monday on a weaker euro after a meeting of the Group of 20 major economies stopped short of announcing major regulatory breakthroughs, sending oil prices down.

Investors also cashed in gold to cover losses in equities as they braced for a third straight week of losses on Wall Street, while a fall in oil prices reduced bullion's safe haven appeal. Speculators cut positions in New York gold futures.

Gold was trading at $740.35 an ounce, down $1 from New York's notional close on Friday, when it gained 1.6 percent on technical buying ahead of the G20 summit.

Gold is struggling to sustain an uptrend since hitting a two-month high of $931 in early October. It was well below a lifetime high of $1,030.80 struck in March.

"At the moment, maybe investors are bit more cautious about gold as a safe haven asset given that basically the price, obviously, compared with a couple of months ago has fallen," said David Moore, commodities analyst at Commonwealth Bank of

Australia in Sydney. "

The gold price has also been very volatile at times as well," he added. "I think there's a preference for cash at the moment."

The dollar rose against the euro after the G20 meeting produced no concrete plan to avert a looming global recession, which threatened to cut demand for commodities and prompted investors to dump risky assets, including gold.

Governments from Washington to Beijing agreed on Saturday to a raft of fiscal and monetary steps to rescue the global economy but it was left to individual governments to tailor their responses to their particular circumstances and troubled


Weaker oil and volatile equity markets equties also put pressure on gold. Japan's Nikkei share average rose more than 1 percent, having fallen sharply in early trade after data showed the world's second-biggest economy was in recession.

Oil slipped more than $1 to below $56 a barrel, falling to near its weakest in almost two years, on recession fears.

"There's very light physical buying at lower levels but I guess the market is still trading at a range of $700 to $760. It simply follows movements in the stock markets," said a dealer in Hong Kong.

New York gold futures fell $2.3 an ounce to $740.2 after settling up $37.50, or 5.3 percent, to $742.50 an ounce on the COMEX division of the New York Mercantile Exchange on Friday.

Noncommercial investors, or speculators, were net long on 63,959 contracts on gold futures traded on COMEX in the week ended Nov. 11 compared to a net long of 68,195 contracts in the week to Nov. 4.

Platinum was trading at $852.50 ounce, up $27 from New York's notional close.

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