Gold drops for second day due to profit-taking

The price of gold in Vietnam slid by VND120,000 a tael (1.2 ounces) over the previous day as global prices corrected themselves after investors sold heavily to lock in gains.

At most gold shops, gold was bought at VND28.03 million and sold at VND28.09 million. Domestic gold prices advanced at a strongest pace since December last year to close at VND28.3 million on June 8.

Low prices saw the bullion market muted as most investors sold gold to take profits earlier when it had climbed high.

The US dollar exchange rate on free market was stable at VND19,000 per dollar. State-owned Vietcombank bought dollars at VND18,950 and sold them at VND19,000.

Globally, gold declined for the third straight day amid the FED’s positive comments on US economic growth and China’s export surge. Bullion reached a record $1,252.11 an ounce on June 8.

By the end of yesterday’s trading session in New York, the metal had dropped by US$1.7 an ounce, or 0.1 percent, to close at $1,234.1.

Spot gold fell US$3 an ounce to $1,231 as of 10:45 am Vietnamese time.

However, analysts said outlook on gold prices remained optimistic as European governmental debt crisis threatened many countries in the region. Europe’s debt woes have driven the euro lower, prompting investors to seek the metal as an alternative asset to protect their wealth.

Holdings at SPDR Gold Trust, the world’s largest exchange-traded fund backed by bullion, was standing at a record high 1,298.5 metric tons.

According to a World Bank official, there was possibility of some European countries experiencing a “double-dip recession.”

Ahead of the European Central Bank’s monthly policy meeting Thursday, there is little doubt that the central bank's record low interest rate of 1.0 percent will remain unchanged.

Gloomy outlook on European situation continued to clip the euro exchange rate against the US dollar lower. In Tokyo, a euro equaled $1.2 this morning.

A short drop in US gasoline reserves hiked oil prices in New York’s trading session last night.

Light sweet crude oil rose as much as $2.39 a barrel, or 3.3 percent, the highest increase since May 27, to trade at $74.38 a barrel.

However, oil reversed this morning after the FED announced that US growth was not as fast as they would like. The economy recovered modestly in many regions.

In Asia, oil was trading at below $74 a barrel.

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