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Gold Falls 1 Percent on Rising Dollar, Growth Fears
September 29, 2011

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Singapore. Gold extended losses and dropped more than 1 percent on Thursday as investors turned to the safety of the U.S. dollar on uncertainty about a resolution of Europe's debt crisis that has stirred up fears for global growth.

Stocks fell in Asia, copper futures dropped more than 5 percent and oil slid more than $1 on mounting worries that Europe's debt problems will plunge the world economy into a second financial tailspin.  

Spot gold lost $3.55 an ounce to $1,604.35 by 0221 GMT, having fallen to a low around $1,582. It had plunged to a two-month low of $1,534.49 on Monday -- down from a lifetime high around $1,920 an ounce struck in early September. 

"The dollar is likely to strengthen on a broad scale, at least short-term. That's definitely going to be weighing on performance. Closer to the 200-day daily moving average, we should find the bottom and I think that's still there," said Dominic Schnider, an analyst at UBS Wealth Management.

"But I am confident that with lower prices, you are going to see very strong jewelry off take, especially as we head towards Diwali on October 26," said Schnider, referring to the Hindu festival of lights in main gold consumer India. U.S. gold futures GCcv1 fell $9.4 to $1,608.7 an ounce.

Reuters