Skip to main content

Weak Dollar No Help for Gold

June-dated contracts slip 60 cents at $681.10 an ounce.

Worrisome news of rising import prices weakened the dollar Thursday but failed to spark much action in gold.

June-dated contracts were edging 60 cents lower at $681.10 an ounce on the Comex division of the New York Mercantile Exchange. The exchange-traded funds that store bars of the metal,

streetTracks Gold Shares

(GLD) - Get Free Report


iShares Comex Gold Trust

(IAU) - Get Free Report

, were both down about 0.4% in recent action.

The Labor Department reported higher-than-expected increases in import prices for March, while export prices were also above consensus forecasts.

After the data, the dollar was buying 118.94 yen, down from 119.33 yen late Wednesday. One euro was recently buying $1.3487, up from $1.343 previously and reaching a two-year high. As recently as Jan. 11, one euro bought $1.29, and a dollar was worth 120.44 yen.

Over time the price of gold and the value of the greenback tend to move in opposite directions.

"This increase

in the cost of imports is directly correlated with the dollar's decline," says Randy Diamond, an analyst at Miller Tabak in New York. "Inflation pressures remain a concern, and the continued weakness in the dollar makes the pressures more pronounced."

A weaker U.S. currency makes foreign goods more expensive in terms of dollars. Bullion is also seen by many as an inflation hedge.

Meanwhile, on the technical side, at least one analyst says he's seeing the formation of a "high-pole consolidation," which could be an auspicious development for the gold bulls.

"Under regular market positions these patterns are more often than not resolved to the upside," says John Roque, a technical analyst at Natexis Bleichroeder in New York. Should that prove true, the next major move will likely be a spike in bullion prices.

Meanwhile, news regarding the alleged plans by a U.S. financier to take over South African miner

Gold Fields

(GFI) - Get Free Report

now appears to be a bit shakier than it first seemed.

Bloomberg News

, which broke the story, now reports that the bona fides of the investor, Edward Pastorini, can't be verified and that the phone number he gave was used four years ago by a Florida firm that had made bogus acquisition proposals.



reports that South Africa's financial sector watchdog is planning to probe the incident. Shares of Gold Fields were barely changed in recent activity.


Barrick Gold


lost 1 cent to $28.93 after saying it reached a deal to boost its stake in the Porgera mine in Papua New Guinea to 95% from 75%. Barrick will pay $250 million to buy the interest from Emperor Mines.

Turning to base metals, copper prices were slipping on the Comex, off 5 cents at $3.53 a pound in recent activity.