Thursday, May 1, 2008

Gold Plunges to 4-month Low on Strengthening U.S. Dollar

Gold dropped as low as $847.10 an ounce Thursday as a surge by the U.S. dollar weakened the yellow metal's appeal.

With gold last at $850.25/851.65 in New York, Simon Weeks, managing director of precious metals at Bank of Nova Scotia, said, "I think $850 is enough for now, but longer-term I expect to see (gold at) the 200-day moving average, currently at $822, before the correction will be complete."

Most precious metals were pressured by the strengthening U.S. dollar, as it reached a five-week high against the euro. Much of that was driven by better than expected numbers from the U.S. manufacturing index for April.

Gold futures in the U.S. dropped, with the June contract down $14.20 to $850.90 an ounce.

There were also concerns among dealers who watch a drop in bullion holdings in StreetTRACKS Gold Shares, the largest gold ETF in the world. It now holds 580.45 tons, a 10 percent loss over the last 10 days.