Gold Futures Fall as Dollar Strengthens

Gold futures declined sharply on Friday, October 30, 2009, as a stronger U.S. dollar and weaker equities prompted investors to book profits in the metal. December gold settled at $1,040.40 an ounce on the Comex division of the New York Mercantile Exchange, down $6.70 from the previous day. The ICE Futures U.S. dollar index was up 0.393 point at 76.310, with analysts attributing the dollar's rise to decreased risk appetite. Gold, often viewed as a dollar hedge and alternative currency, traded inversely to the dollar, while personal income and spending data showed that inflation was not an immediate threat, further weighing on gold prices.

Key Takeaways:

• December gold futures declined $6.70 to settle at $1,040.40 an ounce on the Comex division of the New York Mercantile Exchange.
• The ICE Futures U.S. dollar index was up 0.393 point at 76.310, with analysts attributing the dollar's rise to decreased risk appetite.
• Charles Nedoss, senior account manager and metals analyst with Peak Trading Group, stated that the dollar was the primary driver of gold's decline, while gold is often viewed as a dollar hedge and alternative currency.
• Sterling Smith, commodity trading adviser and market analyst with Country Hedging, noted that personal income and spending data showed that inflation was not an immediate threat, further weighing on gold prices.
• Jon Nadler, senior analyst with Kitco Metals, stated that risk traders took a "latte break" this morning, allowing the dollar to re-group.
• Silver futures tracked lower with gold prices, with Comex December silver losing 40 cents to settle at $16.255 an ounce.

Statistics:

• December gold futures settled at $1,040.40 an ounce, down $6.70 from the previous day.
• The ICE Futures U.S. dollar index was up 0.393 point at 76.310.
• Nymex December crude was $2.74 lower a barrel recently.
• Comex December silver lost 40 cents to settle at $16.255 an ounce.

Sources:

• Dow Jones Commodities News via Comtex
• Peak Trading Group
• Country Hedging
• Kitco Metals
• RBC Capital Markets Global Futures
• Matt Whittaker, Dow Jones Newswires
• Dow Jones Newswires
• Dow Jones & Company, Inc.