BLBG: Gold Climbs in Asia as Dollar Drop Increases Investment Demand
Gold gained in Asia as the dollar declined, boosting demand for the precious metal as a store of value and an alternative investment.
The dollar approached the weakest in two months against the euro after U.S. Treasury Secretary Timothy Geithner unveiled proposals to remove bad debt from the books of banks, spurring them to resume lending. Bullion tends to climb when the dollar falls as investors seek to preserve their wealth and it becomes cheaper for holders of other currencies.
“Gold’s inverse relationship with the dollar has come back,” Wallace Ng, chief precious metals dealer at Fortis Bank’s commodity derivatives unit, said from Hong Kong today.
Gold for immediate delivery rose as much as 0.5 percent to $944.16 an ounce, and was at $942.98 at 10:54 a.m. in Singapore. Silver was little changed at $13.69 an ounce.
The dollar last traded at $1.3660 per euro compared with $1.3633 yesterday. It reached $1.3738 March 19, the lowest level since Jan. 9. Gold has risen 3 percent in the past week as the dollar index, which tracks the greenback against six major trading partners, tumbled 4.2 percent.
“In the near term, we’ll continue to see small corrections within the $920 to $990 range, as people are optimistic about the stabilization of the financial markets,” said Ng. “Gold is still in a constructive uptrend as the abundant supply of money will create inflation in the long term.”
Platinum-Gold Spread
The premium of platinum to gold prices stood at $190 an ounce yesterday, the highest this year, and up from the Jan. 27 low of $50.78 an ounce.
The widening premium between platinum and gold would be understandable in a “fundamentally-based commodity bull market,” David Wilson, an analyst at Societe Generale, said in a report. “Whether it would be justified in the current climate is rather more debatable.”
Platinum for immediate delivery fell 0.6 percent to $1,123 an ounce at 10 a.m. Singapore time. The metal, used in vehicle exhaust filters, climbed to $1,141 yesterday, the highest since Sept. 26, on expectations that the U.S. plan to rid banks of toxic assets will revive the economy and boost demand. Palladium rose 1.2 percent to $211.75 an ounce, trading near a one-month high.
