BLBG: Gold Advances for Second Day in London as Dollar Index Weakens
Gold advanced for a second day, climbing to a one-week high, as the dollar declined against the currencies of major trading partners.
Gold jumped 1.8 percent yesterday as the dollar fell to a four-week low against the euro. Some investors have bought gold betting on “negative data” about U.S. banks in a report from the Federal Reserve scheduled in two days, said Manqoba Madinane at Standard Bank Group Ltd. in Johannesburg. The dollar index has slid 0.8 percent this week.
“The euro/dollar is the main factor at the moment,” Madinane said by phone. “The market has already priced in negative data.”
Gold for immediate delivery rose $8.82, or 1 percent, to $910.92 an ounce by 12:45 p.m. in London, the highest price since April 24. June gold futures climbed 1 percent to $911.60 an ounce in electronic trading on the New York Mercantile Exchange’s Comex division.
Prices for the precious metal will average $980 an ounce in the fourth quarter, as the dollar falls to $1.45 a euro in 12 months, according to Barclays Capital. The dollar was at $1.3382 a euro today. Gains for gold may be slowed as prices over $900 an ounce curb demand from jewelers, the biggest users of the metal, said Suki Cooper, an analyst at Barclays in London.
About 10 U.S. banks need additional capital to weather a deeper recession, so-called stress tests may show today, people familiar with the matter said. Many of the 19 lenders under review and the government are set to discuss the examinations after markets close May 7, the people said.
Equity Markets
Gold has climbed 3.3 percent this year, partly because some investors bought the metal as a hedge against declines in equity markets. Holdings in the SPDR Gold Trust, the biggest exchange- traded fund in gold, were at 35.5 million ounces yesterday, unchanged since April 23.
“Investment flows are very important for the market and we haven’t seen much in the way of new flows,” Madinane said.
Among other metals for immediate delivery, silver gained 2.2 percent to $13.33 an ounce. Platinum rose 0.7 percent to $1,130, and palladium increased 1.6 percent to $223.75 an ounce.
