Gold edges lower, pressured by dollar gains

BY

Gold futures edged lower Tuesday, as gains in the dollar weighed on the precious metal.

Gold for December delivery fell $2 at $678.90 an ounce on the New York Mercantile Exchange.

On Monday, gold closed down 70 cents at $680.90 an ounce.

Gold "has lost a little ground this morning on the back of the dollar gains," said James Moore,
analyst at TheBullionDesk.com, in a research note.

"For the moment, gold remains comfortable within the boundaries of its recent range between $658 and $675, but overall the outlook is still supportive for higher prices as investment demand sees steady growth, while producers continue their de-hedging programs," Moore said.

The dollar rose against its major rivals Tuesday, with the British pound briefly falling back below
the key $2 barrier after a sharp fall in U.K. inflation data raised doubts about whether the Bank
of England will hike interest rates again. The sterling lost 0.5% against the greenback at $2.0008, having hit a low of $1.9999 immediatoldy after data showed U.K. consumer price inflation had dropped to 1.9%, reverting back below the government's 2% target figure.

The Dollar Index, which tracks the greenback against a basket of the world's major currencies, gained 0.2% at 81.23.

"The US dollar is enjoying impressive gains against most of the major foreign currencies today as the euro-zone reported disappointing growth figures, the UK reported softer than expected
CPI, and New Zealand reported an unexpected decline in retail sales," said Marc Chandler, global currency strategist at Brown Brothers Harriman, in a research note.

Other metals prices also dropped. September silver fell 2.50 cents at $12.830 an ounce, October platinum fell $4.30 at $1,282.80 an ounce and September palladium dropped $5.35 to
$352.80 an ounce.

September copper declined 5.05 cents, or 1.5%, to $3.39 a pound.

"Despite the largely steadier tone evident today, we think the dust needs to settle through this week as well before metals steady themselves," said Edward Meir, analyst at MF Global, in a
research note.

"There is still too much uncertainty in most financial markets, typified by the large intraday
swings in the bond and stock markets, to bestow any sense of normalcy to trading right now."

Inventories and indexes
Gold warehouse inventories fell by 10,356 troy ounces to stand at 7.13 million troy ounces as of late Friday, according to Nymex data. Silver and copper supplies were both unchanged at 133.3 million troy ounces and 21,655 short tons, respectively.

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