BLBG: Gold Climbs to One-Week High as Dollar Declines; Platinum Gains
Gold rose to a one-week high in New York and London as the dollar declined against the currencies of major trading partners. Platinum and silver also climbed.
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 0.9 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.”
June gold futures climbed $7.80, or 0.9 percent, to $910 an ounce by 10:17 a.m. on the Comex division of the New York Mercantile Exchange. The metal earlier rose to $916.70, the highest since April 27. Gold for immediate delivery in London rose as much as 1.6 percent to $916.09 an ounce.
Gains in the metal accelerated after prices rose above a trend line starting from Feb. 20, triggering buying by traders who follow charts and graphs, said Eugen Weinberg, an analyst at Commerzbank AG in Frankfurt. The metal may climb to $925 on the technical buying as early as this week, he said.
Prices for gold 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 $1.34 a euro today. Gains in gold may slow 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 3.4 percent this year in London, 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 3.6 percent to $13.51 an ounce. Platinum rose 1.3 percent to $1,136.25 and palladium increased 1 percent to $222.50 an ounce.
