RTTNews - Gold fell on Monday as the U.S. dollar strengthened against other majors, reducing the need for a hedge investment. The drop took the metal to its lowest level in nearly six weeks.
August-stamped gold fell to $921.00, down $15.20 for the session. Prices touched an intraday low of $918.30.
The greenback reached a five-day high against the euro moving away from the 1.4000 mark it fell below late last week. The buck also climbed modestly higher against the sterling. Gold usually moves opposite the dollar because of the precious metal's hedge value.
The World Bank reduced its global GDP estimate as well as the outlook for most other economies and warned of a large decline in international capital flows amidst financial market fragility and recession.
The lender predicts the world economy will shrink 2.9% this year, larger than its earlier prediction of a 1.7% decrease. In a report released on June 11, the lender had predicted the economy to shrink close to 3% in 2009. Global GDP is forecast to rebound with 2% growth next year and 3.2% by 2011.
The announcement sent most commodities into a spiral. Light sweet crude oil for July delivery fell $2.62 to finish at $66.93, its lowest finish since June 3. Gold's hedge value also often moves with crude.
Gold had lost $4.50 on a light week of trading. Investors remained on the sidelines awaiting the Federal Reserve's interest rate decision next week. Nonetheless, the weekly drop was the third in a row for the precious metal.
The economic calendar is light on Monday, leaving traders to look ahead to later in the week. Gross domestic product data on Thursday joins Wednesday's rate decision as the top news of the week.
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