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Gold Little Changed as Dollar Strengthens; Platinum Declines

Posted by Manish Agrawal on Tuesday, 9 December, 2008

 

By Glenys Sim

Dec. 9 (Bloomberg) — Gold traded little changed in Asia as the dollar gained, eroding the appeal of the precious metal as an alternative investment. Platinum declined.

The dollar advanced as much as 0.5 percent against a weighted basket of six major currencies, paring yesterday’s 1.8 percent loss after U.S. President-elect Barack Obama’s pledge to spend more on infrastructure boosted stocks and reduced the currency’s haven appeal.

“Gold is pressured by the broad-based deleveraging amid the financial crisis,”Cherry Chen, analyst at Core Pacific-Yamaichi International, wrote in a report e-mailed today. “Gold will be supported by its unique role of a safe haven investment, a hedge against inflation and a declining U.S. dollar.”

Bullion for immediate delivery fell 0.1 percent to $771.67 an ounce at 2:25 p.m. in Singapore. Gold for February delivery in after-hours electronic trading on the Comex division of the New York Mercantile Exchange added 0.3 percent to $771.90 an ounce.

Obama pledged Dec. 6 to boost the economy with the biggest public-works spending package since the 1950s, including investment in roads, bridges and public buildings. The dollar was at $1.2876 euro from $1.2963 late in New York yesterday. It reached $1.2563 on Dec. 2, the lowest since Nov. 21.

Gold for October delivery dropped 2.1 percent to 2,289 yen a gram ($769 an ounce) on the Tokyo Commodity Exchange, and Shanghai gold for June delivery added 0.9 percent to 170.01 yuan a gram ($769 an ounce).

Platinum Falls

Immediate-delivery platinum fell 2.7 percent to $809.30 an ounce at 2:25 p.m. Singapore time. The metal used in vehicle catalytic converters rose the most in two weeks yesterday after Congressional Democrats sent President George W. Bush a draft proposal for a $15 billion, short-term rescue of U.S. automakers and said it will likely be voted on this week.

The metal for January delivery was down 3.8 percent at $811 an ounce in New York, and October-delivery platinum on the Tokyo Commodity Exchange lost 5.3 percent to 2,392 yen a gram.

“If passage of the plan is delayed, we believe that the platinum group metals might give up considerable ground on disappointed selling,” James Steel, an analyst at HSBC Securities in New York, said in a report today.

Automakers account for more than 60 percent of global platinum consumption, according to estimates by Johnson Matthey Plc, a London-based metals refiner, trader and researcher. Palladium, as well as platinum, is used to make catalytic converters for car and truck exhaust systems.

Among other precious metals for immediate delivery, silver was up 0.4 percent at $10.03 an ounce, and palladium was down 0.4 percent at $176.25 an ounce.

To contact the reporter on this story: Glenys Sim in Singapore atgsim4@bloomberg.net

Source: http://www.bloomberg.com/apps/news?pid=20601012&sid=a5tvrCwJxK4k&refer=commodities

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