Gold falls as dollar rises
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NEW YORK (Reuters) - U.S. precious metals futures fell further Friday morning as a stronger U.S. dollar sparked speculative liquidation in the volatile hard assets, dealers said.
In early trade gold for June delivery was down $27.40, or 4 percent, at $653.50 an ounce on the New York Mercantile Exchange's COMEX division, trading from $688.90 to $651 which marked its cheapest since late April.
NYMEX June palladium shed $39.50 or 10 percent to $333 an ounce, hitting a six-week low of $330.
In earlier London action, gold prices fell as they tracked trends in the dollar, but the buyers that took the market to recent 26-year highs should soon return, dealers said.
"We might get people encouraged to buy back at these levels and drive it higher again," said Robin Bhar, analyst at UBS Investment Bank.
"We do expect more volatility... but today seems to be a day of consolidation."
Spot gold rose as high as $688.50 an ounce in Asian trade before falling to $661.20 an ounce, down from $680.70 in late New York trade and off last week's 26-year high of $730.
Bullion dealers were braced for choppy trade.
"Take out a coin and toss. Whatever it says just follow it... I will stick to my trading range of $670 to $730 for the moment until proven otherwise," said a bullion dealer in Singapore.
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IRAN: EURO TO REPLACE DOLLAR AS OIL CURRENCY
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Tehran, 5 May (AKI) - In July Iran will ditch the dollar in favour of the euro as the currency in which it will accept payments for its oil and natural gas exports, Iranian president Mahmoud Ahmadinejad announced Friday. The switch, first mooted months ago, was expected but Ahmadinejad's decision comes just as Washington is stepping up pressure on other United Nations Security Council members to act against Tehran for flouting agreements taken with the UN's nuclear watchdog.
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Venezuela Considers Selling Oil in Euros
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Caracas, Venezuela, May 18, 2006—Venezuelan President Hugo Chavez declared on Tuesday that Venezuela would consider putting the sale of its oil in Euros. His comments come after Iran had announced that it too is contemplating switching to the European currency.
“That was an interesting proposal made by the president of Iran,” Chavez told Channel 4 News in London. “We are also free to choose between the dollar and the euro. I think that the European Union has made a great contribution with the Euro.”
“In a way, what the President of Iran is saying… is recognizing the power of Europe, that they have succeed in the integration and have a single currency that competes with the dollar, and Venezuela can consider that, too, we are free to do that,” Chavez added.
According to the BBC, Iran announced earlier this month that they supported the creation of an “oil exchange that traded solely in Euros”. Experts have warned that such a conversion to the European currency could trigger central banks to convert their dollar reserves to euros, thus potentially worsening the already declining US currency.
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Venezeula switching to Euros would be a bigger hit than Iran as the US gets 10% of it's oil from there and none from Iran. In general though, this is a bit of a real time economics experiment. What happens when an oil producing country switches a different petrocurrency? It's never really happened before.
