Gold Falls with Oil as Dollar Gains, Silver Slides

by on July 29, 2009 · 0 comments

Gold stepped back Wednesday for a second straight day as the U.S. dollar surged and crude-oil prices plunged. Platinum and silver also fell. In other market news, U.S. stocks ended modestly lower.

Bullion update ...In New York trading futures for bullion:

  • Silver for September delivery plummeted 48 cents, or 3.5 percent, to $13.26 an ounce.

  • Gold for August delivery fell $11.90, or 1.3 percent, to $927.20 an ounce.

  • October platinum dropped $24.40, or 2.0 percent, to $1,172.20 an ounce.

Notable precious metal quotes of the day follow:


"Wednesday’s price action in precious metals was primarily defined not as much by the US GDP data as by the collapse in oil prices," wrote Jon Nadler, senior analyst at Kitco Metals Inc. "That, along with a substantial gain in the US dollar, had gold on the retreat once again, and losing more than 1% on the session.

Near-term support thought to lie near $932 also gave way today, and bullion saw lows at near $924.50 per ounce — a possible door opening here for tests at lower levels (915 towards 905)," added Nadler.

"I think [gold’s decline] was mostly the dollar appreciating quickly over the last two days. And weak oil prices also helped remove some support for gold as well," CPM Group’s precious metals analyst Carlos Sanchez was quoted on Reuters.


In London bullion, the benchmark gold price was fixed $13.25 lower earlier in the day to $931.00 an ounce. Silver was set back 42 cents to $13.60 an ounce. Platinum was moved $42 lower to $1,171.00.

Gold, considered a hedge during times of high inflation and economic uncertainty, tends to follow oil and move opposite to the U.S. dollar. A rising greenback makes dollar-denominated commodities, like bullion, more expensive for holders of other world currencies.

Oil and gasoline prices

Oil tumbled exceptionally hard Wednesday — the most in three months — as the Energy Information Administration (EIA) reported crude inventories at levels that were much higher than expected.


"There’s too much oil out there," Michael Lynch, president of Strategic Energy & Economic Research, in Winchester, Massachusetts, was quoted on Bloomberg. "We may test $60 before the week is over as these numbers are absorbed."


The weekly EIA report had crude supplies rising by 5.1 million barrels to 347.8 million barrels in the week ended July 24.

As far as the daily numbers, New York crude-oil for September delivery plunged $3.88, or 5.8 percent, to close at $63.36 a barrel.

Prices at the pump continued with their upward trend this week. The national average for unleaded gasoline rose six-tenths of cent to $2.511 a gallon, according to AAA. The price is 5.0 cents higher than last week, 12.8 cents lower than a month back, and $1.43 less than a year ago.

U.S. Stocks

U.S. stocks dipped Tuesday "after a weak durable goods orders report added to worries about the economy and investors soured on Yahoo’s partnership with Microsoft," writes Alexandra Twin of CNNMoney.

The Dow Jones industrial average fell 26 points, or 0.29 percent, to close at 9,070.72. The S&P 500 Index lost 4.47 points, or 0.46 percent, to 975.15. The Nasdaq Composite Index declined 7.75 points, or 0.39 percent, to 1,967.76.

Check out additional market resources at Live Bullion Spots, the Silver Calculator, U.S. Mint Collector Bullion Price Guide, and the Inflation Calculator.

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