MW: Gold futures rise for first day in five as dollar falls
Macro backdrop suggests 'highly supportive' conditions for precious metal
Gold futures rallied Friday, gaining for the first session in five as pressure on the dollar enhanced the metal's appeal as an investment alternative.
Higher crude-oil prices also gave gold a boost, as the metals complex traded broadly higher.
Gold for February delivery was last up $24.70, or 3.1%, at $832 an ounce on the Comex division of the New York Mercantile Exchange.
Benchmark gold had lost nearly $50, or 5.6%, over the four previous sessions, closing Thursday at its lowest since Dec. 9.
The dollar fell against most major currencies after the Labor Department reported that U.S. consumer prices increased just 0.1% in 2008, the smallest increase in 54 years.
The consumer price index fell 0.7% in December, the third decline in a row, led by an 8.3% drop in energy prices. Economists surveyed by MarketWatch had been looking for a 0.8% decline. See Economic Report.
A weaker greenback tends to push up dollar-denominated gold prices.
Also helping gold move higher, crude-oil futures gained more than 3%. Some investors buy gold as a hedge against rising prices. See Futures Movers.
The ongoing economic downturn and lingering threats of inflation "should prove highly supportive for gold," said GFMS Ltd., a precious-metals consultancy based in London, in its newly released annual gold survey. Prices could rise well above $1,000 during the course of the year, it said.
In the survey, GFMS also reported production from South Africa's gold mines plummeted by an estimated 14% in 2008, the sharpest percentage fall since 1901 when the country was still embroiled in the Second Boer War.
South Africa's output hit its lowest point for a century, relegating the country to the world's No. 3 producer, falling behind the U.S. China extended its lead as the world's biggest producer of mined gold, with an estimated 3% increase in output.
Rounding out the action in metals futures, March copper jumped 6% to $1.5415 a pound, while March silver gained 5.5% to $11.015 an ounce, March palladium moved 2.9% higher to $185.05 an ounce and April platinum rose 2.5% to $945.50 an ounce.
