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Gold Holds Near Lowest Price This Week as Dollar Strengthens

Jan. 16 (Bloomberg) -- Gold held near the lowest price this week in New York on speculation that the U.S. economy is strong enough for the Federal Reserve to continue reducing asset purchases, strengthening the dollar.

The Bloomberg Dollar Spot Index, a gauge against 10 major currencies, rose to a four-month high before a U.S. report economists forecast will show applications for jobless benefits declined last week. Global equities traded near the highest level since 2007. The Fed’s Beige Book business survey released yesterday showed policy makers, who next meet on Jan. 28-29, saw “moderate” growth across most of the country.

The Fed decided in December to cut its monthly bond purchases to $75 billion from $85 billion, helping gold cap its first annual drop in 13 years. Economists in a Bloomberg survey expect the Fed to reduce purchases in $10 billion increments before announcing an end to the program no later than December.

“Strength in the dollar coupled with positive cues from global equities undermined the yellow metal’s safe-haven appeal,” Abhishek Chinchalkar, an analyst at Mumbai-based AnandRathi Commodities Ltd., said in a report. “Most of the macro-economic developments in the U.S. have been very positive. This has renewed tapering expectations.”

Bullion for February delivery was little changed at $1,238.60 an ounce by 7:39 a.m. on the Comex in New York. Prices reached $1,233.50 yesterday, the lowest this week. Futures trading volume was about the average for the past 100 days for this time of day, data compiled by Bloomberg showed. Gold for immediate delivery lost 0.2 percent to $1,239.15 in London.

Gold rallied from a six-month low of $1,181.40 on Dec. 31, reaching a one-month high of $1,255.30 on Jan. 13, on signs of robust demand in China, which probably overtook India as the largest user last year. The Shanghai Gold Exchange delivered 2,197 metric tons of the metal to buyers in 2013, compared with 1,139 tons in 2012, the bourse said in a report.

Silver futures for March delivery fell 0.4 percent to $20.055 an ounce. Palladium futures for March delivery declined 0.4 percent to $740.95 an ounce. Platinum for April delivery lost 0.2 percent to $1,424.70 an ounce.

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