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Gold Declines in Asia as Strengthening Dollar Reduces Appeal

July 2, 2009 at 10:02 by Andriy Moraru

Gold declined in Asian trading as a gain in the dollar curbed the precious metal’s appeal as an alternative investment.

The dollar climbed from a three-week low against the euro after a Chinese official said he hoped the greenback would remain stable and was “not aware” of a plan to discuss a new reserve currency at next week’s Group of Eight meeting. Gold surged 1.5 percent yesterday, the largest closing gain since June 4, as the dollar slumped.

“We may see some consolidation today” for gold, said Darren Heathcote, head of trading at Investec Bank (Australia) Ltd. “It certainly looks that the dollar and gold movements are still linked. The news yesterday that China was reportedly prepared to debate a reserve currency at the G8 summit caused a stir and will continue to have repercussions.”

Bullion for immediate delivery fell 0.3 percent to $938.11 an ounce at 3:16 p.m. in Singapore. Dollar-denominated gold typically declines when the greenback gains as it becomes more expensive for holders of other currencies. Gold for August delivery fell 0.3 percent to $938.50 an ounce on the New York Mercantile Exchange’s Comex unit.

From Bloomberg News.

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