Gold hit a one-month low on a firmer dollar and weaker oil prices, with investors unwinding their trading positions ahead of this week’s Federal Reserve meeting on interest rates.

Gold often takes its cue from movements in the dollar because of its role as an alternative investment to currencies, stocks and bonds. The outcome of the Fed meeting would set the tone for currencies and precious metals, dealers said.
Gold held in StreetTRACKS Gold Shares, the world’s largest gold-backed ETF, fell more than 50 tons in less than a week to about 591 tons as of Monday.
Spot gold fell as low as $874.90 an ounce and was quoted at $879.10/879.80, against $891.65/892.65 late in New York on Monday, when it hit an intraday day high of $895.50 on speculative buying driven by record high oil.
The dollar hit its highest level against the euro in nearly four weeks, on track for its largest monthly gain in nearly a year, amid expectations the Federal Reserve will signal the end of its easing campaign. A firmer dollar makes gold costlier for holders of other currencies and often lowers bullion demand. The metal is also generally seen as a hedge against oil-led inflation.
Spot gold has been trading well below its lifetime high of $1,030.80 an ounce hit on March 17, with attempts to revisit the level resulted in heavy profit-taking by investors. U.S. gold futures for June delivery fell $15.50 an ounce to $880.
In industry news, one mineworker was killed and two were trapped underground at Gold Field’s number 10 shaft at Driefontein mine after a seismic event, the National Union of Mineworkers said. Other precious metals also fell, with spot platinum slipping more than one percent to $1,941/1,951 an ounce from $1,964.50/1,974.50 late on Monday. Silver fell to $16.65/16.70 from $16.96/17.02 an ounce, while palladium dropped to $428.50/433.50 an ounce from $432.50/438.50 in the U.S. market late on Monday.
LME copper slips: London copper futures drifted lower on Tuesday ahead of a welter of U.S. economic data that could hint at the longer term outlook for U.S. interest rates and influence the direction of commodities markets. Copper at the London Metal Exchange, often seen as a good gauge of real economic activity, was quoted at $8,586 per ton at the end of the official open outcry session, down $64 from Monday’s close. Still, the metal is up around 27 percent since the start of the year. LME tin was unchanged at a quoted $29,300/23,950 per ton, down from April 24’s record $24,600 when worries about supply from Indonesia peaked.
Aluminum was down $28 at $2,984 per ton, zinc down $44 at $2,256 per ton, nickel was down $690 at $28,600 per ton, and lead was down $29 at $2,736 per ton. In industry news, diversified miner Anglo American said copper production rose nine percent in the first quarter of 2008.
(Source: Daily Times)