Daily Gold Update

Source: Marketwatch

New York— Gold futures fell Thursday, pressured as investors bid up the U.S. dollar on concerns about Greece's ability to pay its debts and on expectations the Federal Reserve was inching toward raising rates. A higher dollar undermines the value of gold, which is typically bought as an alternative if investors expect paper currencies to depreciate. Gold for February fell $22.20, or nearly 2%, to $1,114 an ounce on the New York Mercantile Exchange. The less actively traded January contract fell $21.70, or 1.9%, to $1,114 an ounce.

Weighing on gold and other commodities, the U.S. dollar jumped to a three-month high after Standard & Poor's downgraded Greece's credit ratings on concerns the country will struggle to rein in its deficit. The dollar rallied last year as the credit crisis mushroomed, driving investors to the perceived safety of U.S. dollars. Even as the credit crisis has eased this year, the dollar has still tended to gain on days the global economic outlook has worsened. But for the most part, the dollar has fallen this year as investors grew more optimistic that the worst of the credit crisis had passed. Plus, the dollar has slid — and gold has risen — as the Fed's efforts to jumpstart the U.S. economy by injecting trillions of dollars in cash into the financial system raised inflation worries. See full story.