Gold Trades Near $700 An Ounce On Iranian Dispute, Dollar Fears
Gold Trades Near $700 an Ounce on Iranian Dispute, Dollar Fears
http://www.bloomberg.com/apps/news?p...Y&refer=canada
May 10 (Bloomberg) -- Gold traded near $700 an ounce in Asia amid tensions over Iran's nuclear research program, and as investors sought alternative investments after the dollar fell close to its lowest in a year against the euro.
The dollar dropped amid speculation the U.S. Federal Reserve will not raise interest rates today, increasing the appeal of other assets like gold against the dollar. The U.S. government also said a letter from Iran's president won't ease tensions over the country's nuclear research program.
"The market is looking for alternatives to the dollar and diving into the metals," said Ron Cameron, a Sydney-based analyst at Ord Minnett Ltd. "There's also concern as there wasn't seen to be anything new in the letter from the Iranian president to George Bush."
Gold for immediate delivery fell $2.30, or 0.3 percent, to $698.60 at 10:32 a.m. Sydney time, after rising as much as 50 cents, or 0.07 percent, to $701.40. Bullion for immediate delivery last surpassed $700 when it touched $710.50 on September 24, 1980.
Gold futures for June delivery fell $1.30, or 0.2 percent, to $700.20 an ounce on the Comex division of the New York Mercantile Exchange in after-hours electronic trading at 10:33 a.m. Sydney time. They had risen as much as $1.40, or 0.2 percent, to $702.90, the highest since October 9, 1980, when the contract reached $708.50.
Bullion has surged 35 percent this year as investors bought the metal to hedge against inflation and as a safe haven. Oil prices reached records this year due to a dispute between Iran and the United Nations over the Middle Eastern country's nuclear program, sparking fears that supplies from the world's fourth- largest oil producer could be disrupted.
Nuclear Weapons
The U.S., France and the U.K. have alleged that Iran's nuclear research program is intended to develop atomic weapons. Iran has denied the charge and says it wants the technology for civilian purposes, including energy generation.
"This is purely a geopolitical move for gold," Frank McGhee, head metals trader at Integrated Brokerage Services LLC in Chicago, said yesterday. "We've been here before; the difference is that this time, there are nukes involved."
Some investors buy gold as a haven against instability in financial markets caused by geopolitical tension.
White House spokesman Scott McClellan yesterday said the 18-page letter from Iran's president, Mahmoud Ahmadinejad, did nothing to address concerns of the international community.
The dollar traded at $1.2758 against the euro at 10:43 a.m. Sydney time, unchanged from late yesterday in New York. It had dropped to $1.2787 on May 8, the weakest since May 12.
