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A Lower Dollar Sets Up This Mornings Trade With Oil Higher

“(Reuters) – Gold pared some losses on Thursday as the euro edged up against the dollar and oil prices firmed but prices were still set for a daily decline as investors took their cue from currency markets.

Spot gold was bid at $1,494.69 an ounce at 1105 GMT, against $1,496.30 late in New York on Wednesday. U.S. gold futures for June delivery fell $2.4 to $1,493.5.

An early bounce in the euro helped gold to a session high near $1,500, with investors wary toward the dollar after minutes of a Federal Reserve meeting in April did not indicate the Fed was ready to start tightening policy any time soon.

“The resistance at $1,500-1,505 is getting increasingly formidable, and chances of gold breaking this in the near term seems to be grim,” said Pradeep Unni, senior analyst at Richcomm Global Services.

“Fed minutes revealed that the United States isn’t anywhere near a rate hike, and thus currency directions will be key,” he added. “Gains beyond $1,503 should be supported by a substantial drop in (dollar), which isn’t shown yet.”

Other commodities such as crude oil and base metals rose from the day’s lows as the dollar surrendered ground to the euro, although gains in the single European currency were tempered by concern about theĀ euro zonedebt crisis.

Gold tends to track crude prices, as the metal is often bought as part of a basket of commodities in which oil is the dominant part, and because it is sometimes seen as a hedge against oil-led inflation.”

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