30/07/07 Gold rises as dollar weakens

Gold prices recovered slightly in early trading today (July 30th) as the dollar weakened slightly against the Euro.

Late last week, gold prices dropped as investors liquidated their gold holdings to cover losses linked to the slide in global equity prices.

However, Thomson Financial reports that spot gold was trading at $661.30 an ounce this morning. This compares to $661.20 in late trading in New York on Friday (July 27th).

A slight weakening in the strength of the dollar brought about the small recovery, but analysts said that further drops could still occur because of continuing weaknesses on the world's stock markets.

Peter Fertig, a consultant to Dresdner Kleinwort, explained to the news agency: "The weakness in global stock markets on concerns of a credit crunch continue and this is probably a negative factor for gold.

"Rising crude oil prices failed to provide support for gold last Friday, and might again be overruled by investors shunning risky assets and flying to the safe haven of government bonds."

However, other analysts said that the drop in gold prices represented an opportunity to buy as prices should rise again in the future - fuelled by "the still bearish outlook for the dollar and the concerns towards US sub-prime and credit risk".