Gold Futures Sink as Dollar Perks Up

Benchmark bullion futures were shedding $18.40 at $885.30 an ounce in recent action on the Comex division of the New York Mercantile Exchange.
Author:
Publish date:

Gold prices were tumbling Monday in New York as funds dumped positions and the greenback rallied.

Benchmark bullion futures were shedding $18.40 at $885.30 an ounce in recent action on the Comex division of the New York Mercantile Exchange.

The drop in gold came amid strength in the U.S. currency. One euro was buying $1.5498, down from $1.5621 Friday. The British pound was selling for $1.9604 vs. $1.9765 in the last session. The dollar was trading for 107.8 Japanese yen, up from 107.1 yen previously.

Early this morning, a couple of large funds "unloaded sizable positions," according to Jon Nadler, a gold analyst at Montreal-based bullion dealer Kitco. "I think there is a realization that the

Federal Reserve is done easing and that's what brought the price of gold up in the first place," he says.

With the

Fed

unlikely to continue cutting short-term interest rates, the dollar will be supported. In turn that could make a price rally hard for dollar-denominated assets such as gold. The Federal Open Market Committee issues its policy statement Wednesday, which should give some insight into the central bank's current stance on inflation and the dollar.

In addition, Nadler says the price charts have started to look unfavorable. "Two times the price has recently failed to overcome resistance above $900, so it is not surprising that we have pulled back," he says.

The

CurrencyShares Euro Trust

(FXE) - Get Report

was falling 0.9%. The

CurrencyShares British Pound Sterling

(FXB) - Get Report

was losing 0.6%. The

CurrencyShares Japanese Yen Trust

(FXY) - Get Report

was shedding 0.9%.

The

SPDR Gold Trust

(GLD) - Get Report

, which holds solid gold bars, was sliding 2.2%.

In the precious metals patch

Harmony Gold Mining

(HMY) - Get Report

was losing 3.8%, weighed down by the falling gold price.