BLBG: Gold Advances in Asia as Rising Crude Oil Provides Support
Gold rose in Asia as rising crude oil prices and a pause in the dollar’s rally added to the appeal of the precious metal as an alternative investment. Platinum rose.
Bullion, down 3.3 percent this week, extended yesterday’s gain after Saudi Arabia said it will deepen oil production cuts next month to help restore prices. Gold fell to a one-month low of $814.66 an ounce yesterday as the dollar neared a five-week high against the euro on speculation European policymakers will be forced to cut interest rates when they meet tomorrow.
“Investment demand continues to be strong,” Tobias Merath, head of commodity research at Credit Suisse Group in Singapore, said in a note today. “Low interest rates are also supportive for gold.”
Bullion for immediate delivery rose 0.5 percent to $826.42 at 11:40 a.m. in Singapore, after gaining 0.1 percent yesterday. Gold for February delivery rose as much as 0.8 percent to $826.90 in after-hours electronic trading on the Comex division of the New York Mercantile Exchange, having earlier fallen 0.2 percent.
“As long as markets are pricing in a deflationary environment, volatility is likely to remain high,” Merath said.
The dollar fell from a five-week high against the euro on speculation a report today will show U.S. retail sales declined for a sixth month. The dollar weakened to $1.3266 versus the euro from $1.3182 late yesterday in New York, when it touched $1.3141, the strongest level since Dec. 11.
Platinum
Platinum for immediate delivery rose as much as 1.4 percent to $957 an ounce, as investors deemed the 5 percent decline in the past two days as excessive. The metal has fallen 40 percent in the past year on concern demand from carmakers may weaken further as their global sales plunge. Most platinum and palladium consumption is for catalytic converters to filter noxious gases from engine exhaust.
Ford Motor Co., the second-largest U.S. automaker, expects U.S. sales of cars and light trucks may fall as much as 9 percent this year from 2008, when they reached a 16-year low. PSA Peugeot Citroen, Europe’s second-biggest carmaker, reported sales dropped 8.7 percent last year.
Among other precious metals for immediate delivery, silver added 0.5 percent to $10.81 an ounce, and palladium rose 1.4 percent to $186.50 an ounce as of 11:40 a.m. in Singapore.
