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Thursday, 8th June 2006 (4911 views)

Gold prices hit a seven-week low on Thursday (8th June) amid rising dollar values and weaker oil prices.

The day's drop in prices on the precious metal meant it has fallen for four straight days this week. Expectation that US interest rates are set to rise has kept gold prices in check, in addition to stronger-than-expected employment data from the United States.

Gold prices were quoted at 12noon GMT at around $618 an ounce in London, having closed in New York at $630 on Wednesday.

"The market is concerned that the (US) Federal Reserve will raise interest rates further," Michael Widmer, analyst at Macquarie Bank, told Reuters. "That would be positive for the dollar and negative for the gold price."

Mr Widmer argued that $610 was the key price for gold, as if it fell below this level then 'technical selling' would take over as investors hedged their gold funds, causing a further drop to around $540.

However, Mr Widmer urged that if a value above the $610-mark could be sustained, "then price falls should stop".

 

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