Gold May Fall as Stronger Dollar, Lower Oil Prices Curb Demand

July 10 (Bloomberg) -- Gold may decline as a stronger dollar and lower oil prices reduce the precious metal’s appeal as an alternative investment and hedge against accelerating consumer prices.

Twenty-one of 32 traders, investors and analysts surveyed by Bloomberg News, or 66 percent, said bullion would fall next week. Five people forecast higher prices and six were neutral. Gold futures for August were down 1.6 percent for the week, at $915.80 an ounce, as of noon in New York yesterday.

Crude oil, used by some investors as an indicator of the outlook for inflation, had lost 10 percent for the week at the same time. The U.S. Dollar Index, a six-currency measure of the greenback’s value, reached a two-week high on July 8. Bullion typically moves inversely to the U.S. currency.

“Gold should fall next week, continuing its recent moves due to the strength of the dollar and the weakness in oil,” Leonard Kaplan, president of Prospector Asset Management in Evanston, Illinois, said by e-mail. Bullion “should be well supported at $880” an ounce, he said.

The weekly gold survey has forecast prices accurately in 157 of 269 weeks, or 58 percent of the time.

This week’s survey results: Bullish: 5, Bearish: 21, Neutral: 6