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Gold drops on rising dollar, talk of cuts to Indian imports

Published 06/04/2013, 12:59 PM
Updated 06/04/2013, 01:00 PM

Investing.com - Gold prices dropped on Tuesday after the dollar rebounded on talk Japan may take fresh steps to stimulate its economy, which weakened the yen.

Talk of physical demand waning in India fueled the selloff as well.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery were down 1.11% at USD1,396.25 a troy ounce in U.S. trading on Tuesday, up from a session low of USD1,388.65 and down from a high of USD1,414.55 a troy ounce.

Gold futures were likely to test support USD1,384.45 a troy ounce, Friday's low, and resistance at USD1,416.35, Monday's high.

The dollar strengthened on Tuesday after Japanese government sources told Reuters that Tokyo may direct public pension funds, which control the dollar-equivalent of USD2 trillion in assets, to increase investments in equities and overseas assets.

The news sparked demand for the greenback on sentiments investors will buy dollars to move investments out of Japan and into U.S. and other markets.

Gold and the dollar tend to trade inversely from one another,.

Gold saw further losses on reports that India, the world's largest consumer of gold, may restrict imports to narrow a record-wide current account deficit.

Elsewhere on the Comex, silver for July delivery was down 1.42% at USD22.398 a troy ounce, while copper for July delivery was up 1.04% and trading at USD3.365 a pound.










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