Gold May Decline in Asia as Dollar’s Advance Reduces Demand

Oct. 21 (Bloomberg) -- Gold, little changed in Asia, may decline as the dollar climbed for a second day, sapping demand for commodities including the precious metal.

The Dollar Index, which tracks the currency against those of six major trading partners, gained after reports showed that U.S. builders broke ground on fewer-than-estimated homes and wholesale prices unexpectedly fell. Gold, which touched a record on Oct. 14, typically moves inversely to the dollar.

“The gold market is taking its cue from an upturn in the dollar,” said Kim Jae Jun, a trader with Eugene Investment & Futures Co. in Seoul. “After a recent rally to records, market participants have turned a bit uneasy about chasing further.”

Gold for immediate delivery traded at $1,054.30 an ounce at 9:18 a.m. in Singapore compared with yesterday’s close of $1,055.20 and the all-time high of $1,070.80. December gold futures fell 0.4 percent to $1,054.50 an ounce on the New York Mercantile Exchange’s Comex division.

Asian stocks fell, snapping a two-day advance, and oil declined to less than $79 a barrel in New York on concern that the recovery in the U.S. economy may be faltering. The Dollar Index rose to a high of 75.597, paring its decline over the past year to about 10 percent.

U.S. housing starts rose 0.5 percent to an annual rate of 590,000 from 587,000 in August, a Commerce Department report showed. Prices paid to factories, farmers and other producers fell 0.6 percent, the Labor Department said.

Gold holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, were unchanged at 1,109.31 metric tons as of Oct. 20, according to the company’s Web site.

Among other precious metals, silver shed 0.4 percent to $17.42 an ounce, platinum was little changed at $1,349.75 an ounce and palladium weakened 0.7 percent to $334.25 an ounce.