Gold bounces after testing a 7-week low
Gold has bounced in thin trade in Asia after closing New York for a third losing day at a 7-week low on Monday.
"Gold is rising because of the weak [US] Dollar," said a futures trader in Seoul, ignoring December's 5% drop so far. "It seems difficult for the Fed to raise interest rates as most of the economic indexes released in the US have been negative."
But the currency market doesn't care about fundamentals right now, and the Dollar held its ground once again on Monday despite very negative data.
America's trade gap widened to a record $225.6 billion in the third quarter, said Washington, up from $217.1 billion in the spring. The NAHB/Well Fargo sentiment index - a leading real estate indicator - fell to 32 this month from 33 in November. Any reading below 50 means that most US estate agents see conditions as poor.
"It's a given that US will lower interest rates next year and Dollar will trade weak," said a commodities trader in Mumbai earlier. But not even bullish gold news has helped gold prices move sharply higher today.
The World Gold Council's office in Dubai announced that local retail gold sales rose 41% between June and Sept. compared with summer last year. And this month's Dubai Shopping Festival could see sales rise 45% on 2005 levels, according to an industry expert – even though gold prices have risen dramatically year-on-year.
What might 2007 hold for gold prices? Ben Bernanke's trip to Beijing to "talk down" the Dollar last week might give you some clues – click here to find out...