Friday, February 08, 2008

Gold May Fall as Dollar Rises Against Euro

By Pham-Duy Nguyen
Feb. 7 (Bloomberg) -- Gold futures, little changed, may decline on speculation that a gain in the value of the dollar will erode the appeal of the precious metal as an alternative investment. Silver rose.
Gold generally moves in the opposite direction of the dollar, which climbed for a third straight day against the euro on bets the European Central Bank may lower interest rates later this year. Gold rose 31 percent last year as the Federal Reserve cut U.S. interest rates to avoid a recession while the ECB raised rates, sending the dollar 9.5 percent lower against the euro.
``The anticipation in the gold market is that the ECB will have to lower rates eventually,'' said Ron Goodis, futures- trading director at Equidex Brokerage Group Inc. in Closter, New Jersey. ``Gold is going to come down with the euro coming down.''
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