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Gold Lower as Dollar Gains, China’s Aluminum Appetite Seen Surging
Gold is sliding down in early morning trade Tuesday, as the greenback strengthened against the euro in particular, thus diminishing investors’ appetite for alternative assets.
Traders will be following the upcoming European Union summit meeting to start March 25 to see whether the EU will provide financial aid to ailing Greece, and to gauge the state of the euro zone in general.
At 0815 ET, gold is 0.3% lower at $1,096.00 an ounce, while silver is nearly 1.0% lower at $1,677.00 an ounce, and copper is down 0.5% at $336.35 a pound.
Still, strong fundamental demand for gold is likely to persist. While South Korea said its gold holdings currently represent about 0.2% of total foreign reserves, some government officials say that the rate could be much higher.
"The price of gold increased by more than five fold over the past decade but the Bank of Korea hasn’t done much to take advantage of it. We need to buy more gold to diversify away from a weakening dollar," said Rep. Lee Hye-hoon of the Grand National Party.
In China, meanwhile, Aluminum Corp. of China Ltd. expects aluminum demand in the country to expand by at least 20% this year as the economy continues to sizzle. The head of the company otherwise known as Chalco, Liu Xiangmin, said that aluminum demand will reach 17 million metric toncs in 2010.
In Australia, Dragon Mining (DRA) said it was "encouraged" by drilling results at Finland’s Orivesi gold mine.
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