BLBG: Gold Rises in London, Heads for Weekly Gain on Weaker Dollar
Gold climbed to a three-week high in London, heading for the first weekly gain in a month, as the dollar’s slide boosted demand for the metal. Silver also rose.
The dollar headed for a record weekly drop against the euro, while stocks in Europe and Asia fell on speculation plans by the Federal Reserve and Bank of Japan to buy bonds won’t revive the global economy. Gold is set for a 3.6 percent increase this week.
“Given the actions of the Fed and other central banks, the dollar and various other currencies have lost their appeal as safe havens, potentially triggering further investment flows toward gold,” James Moore, an analyst at TheBullionDesk.com in London, wrote today in a note.
Gold for immediate delivery rose as much as $7.33, or 0.8 percent, to $967.17 an ounce, and traded at $963.41 by 9:20 a.m. local time. April futures added 0.5 percent to $963.60 an ounce in electronic trading on the New York Mercantile Exchange’s Comex division.
Bullion rebounded this week after the Fed on March 18 pledged to buy as much as $1.15 trillion of Treasuries and mortgage debt. The metal, which briefly rose above $1,000 a month ago, is trading 6.8 percent below the record $1,032.70 reached a year ago. It’s up 9.2 percent this year.
“It is not a question of if, but when, the yellow metal will retest $1,000,” Emanuel Georgouras, a precious-metals trader at Marex Financial Ltd. in London, wrote today in a note. “If the European Central Bank joins the Fed with quantitative easing, gold as an inflation hedge against collaborative money printing will be ready to test new highs.”
Turmoil Hedge
For most of this year, gold and the dollar have abandoned their traditional inverse relationship as investors bought both to hedge against turmoil in financial markets. Some analysts expect the correlation to resume following the Fed’s announcement.
Holdings in exchange-traded funds have climbed to records this year as investors are buying gold to protect their wealth. Assets in the SPDR Gold Trust, the biggest ETF backed by bullion, expanded 1.7 percent to a record 1,103.29 metric tons yesterday, according to figures on the company’s Web site.
Among other metals for immediate delivery in London, silver gained 1 percent to $13.72 an ounce. Platinum lost 0.1 percent to $1,125 an ounce, and palladium rose 1 percent to $208 an ounce.
