27/07/07: Gold futures down as dollar rises

A resurgent US dollar led to gold futures dropping to a near three-week low on Friday (July 27th).

Gold for August delivery was down by $1.30 to $661.50 an ounce on the New York Mercantile Exchange, which was significantly lower than a recent peak of $684.70 a week ago, MarketWatch reports.

The movement was partly down to a resurgent US economy. The Commerce Department reported that the economy grew at an annual rate of 3.4 per cent over the second quarter, which was the fastest pace since the first quarter of 2006.

On the currency markets, the dollar rose by 0.3 per cent against the yen and by 0.7 per cent against the euro.

The price of gold often moves in the opposite direction to the dollar, as when the dollar slips many investors panic and opt for the long-term security that gold offers.

"The market still remains under pressure from the strength in the dollar," Carlos Perez-Santalla of Hudson River Futures told Bloomberg.