Gold Unchanged, Erases Early Gain as Rising Dollar Curbs Demand

June 10 (Bloomberg) -- Gold settled unchanged in New York, erasing earlier gains, as a rebounding dollar curbed demand for the precious metal as an alternative investment.

The U.S. Dollar Index, a six-currency gauge of the greenback’s value, rose as much as 1 percent after earlier dropping 0.5 percent. The precious metal typically moves in the opposite direction as the U.S. currency. New York gold futures gained 10 percent in May as the dollar index slid 6.4 percent.

“The fortunes of the U.S. dollar dictated today’s activity in gold,” analysts at RBC Capital Markets in London said today in a report.

Gold futures for August delivery settled at $954.70 an ounce on the New York Mercantile Exchange’s Comex division, after earlier gaining as much as 1.3 percent. Bullion for immediate delivery sank $2.61, or 0.3 percent, to $952.17 an ounce at 7:47 p.m. local time in London.

“The main driver is still the U.S. dollar,” Walter de Wet, a Standard Bank Ltd. analyst in London, said today in a note. “We view the current pullback in precious metals prices on the back of a stronger dollar as temporary.”

The metal fell to $953.75 in the afternoon “fixing” in London, used by some mining companies to sell their output, from $961.25 at the morning fixing.

Gold prices are being supported by strong physical buying this week, de Wet said.

“The main difference between the current buying and that of mid-April is the high gold prices,” he said. “In April, scaled buying was triggered by a fall in the gold price below $880. Now, the buying is triggered by gold below $950.”

Price Outlook

Gold has the potential to break through $1,000 an ounce and may climb as high as $1,100 by the end of the year, Paul Walker, the chief executive officer of research company GFMS Ltd., said yesterday in an interview in Tokyo. Still, next year gold prices may average “$100 below where they are today,” he added.

Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, remained at 1,132.15 metric tons as of yesterday, unchanged since last week, the company’s Web site showed. Gold held in ETF Securities Ltd.’s exchange-traded commodities rose 0.3 percent to a record 7.676 million ounces yesterday, according to the company’s Web site.

Silver futures for July delivery advanced 8.5 cents, or 0.6 percent, to $15.225 an ounce in New York. Silver for immediate delivery fell 9 cents, or 0.6 percent, to $15.155 an ounce at 7:53 p.m. local time in London.

Platinum Gains

Platinum futures for July delivery rose $15.30, or 1.2 percent, to $1,273.20 an ounce on the Nymex. Palladium futures for September delivery gained $1.70, or 0.7 percent, to $258.75 an ounce in New York.

In South Africa, Anglo Platinum Ltd. workers rejected a contract offer that included a 6 percent pay increase, according to an e-mailed statement today from the National Union of Mineworkers. Contract talks are set to resume June 25, the group said. The union has demanded a 15 percent pay increase.

Anglo Platinum is the world’s biggest producer of the metal.

Platinum held in ETF Securities’ ETCs rose 3.3 percent to 336,693 ounces yesterday, according to the company’s Web site.