Metals - Gold down as weak mkts spark risk aversion; strong dollar weighs UPDATE

Metals - Gold down as weak mkts spark risk aversion; strong dollar weighs UPDATE

	Published : Thu, 16 Aug 2007 10:48 By : Agencies Print this Story

(Updating with full report)

LONDON (Thomson Financial) - Gold fell as weak financial markets sparked another bout of risk aversion and triggered a commodity sell-off as traders rushed to cover losses.

Oil, most base metals and natural gas prices were also all down this morning, which did little to boost sentiment towards the precious metals market.

While gold has performed reasonably well in the face of shaky global markets and held above 660 usd, a key psychological level, there have not been enough investors rushing to buy the metal as a safe haven asset to send gold higher.

'Here is a crisis and gold isn't doing a great deal,' said Societe Generale analyst Steven Briggs. 'It's a challenge for people to say this has been a good performance (by gold).'

Briggs added gold is a risky and vulnerable asset in tough times. 'If the crisis continues, it's likely to take a big hit,' he said.

At 10.28 am, spot gold was trading at 664.15 usd an ounce against 669.00 usd in late New York trade yesterday.

Gold is traditionally seen as a safe haven asset in times of a crisis. In recent weeks, while fears of a global credit crunch have rocked markets, gold has neither rallied nor plummeted.

The stronger dollar this morning, meanwhile, is doing nothing to help gold, as it made the metal pricier for those trading in other currencies.

The US currency is also seen as an alternative asset to gold, which typically trends in an inverse direction to it.

Investors will continue to track moves in the equity markets throughout the day, with any further losses likely to spark fresh weakness in the precious metals sector.

'Sub-prime and credit concerns are likely to remain the focus for investors in the coming sessions with additional equity related weakness triggering further rounds of risk aversion,' noted BullionDesk.com analyst James Moore.

Among other precious metals, silver was down at 12.43 usd from 12.53 usd, platinum eased to 1,249 usd from 1,262 usd while palladium was also down more than 1 pct at 339 usd from 346 usd.

anealla.safdar@thomson.com

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