MW: Gold rises on weakening dollar, inflation concerns
Gold futures rose Wednesday to above $930 an ounce, as the U.S. dollar dropped against the euro for a third straight session amid a cautious tone in financial markets, increasing gold's investment appeal.
Concerns over long-term inflation also helped gold move higher, as investors tend to buy the metal as a hedge against rising prices. Meanwhile, Traders were also awaiting minutes from the Federal Reserve's last meeting, due for release at 2 p.m. Eastern time.
Gold for June delivery rose $5.30, or 0.6%, to $932 an ounce in early North American electronic trading.
"Given recent comments from Fed officials suggesting a period of higher inflation would be beneficial to the U.S. economy, we could see renewed interest from investors, aiming to take advantage of gold's traditional role as an inflation hedge," said James Moore, a precious metals analyst at TheBullionDesk.com, in a research note.
Gold investment demand in the first quarter more than tripled from a year ago to a record level as investors piled into gold exchange-traded funds to hedge against the global economic downturn, according a report released early Wednesday by the World Gold Council.
Investment demand totaled 595.9 metric tons in the first three months of the year, up from 171.3 metric tons a year ago, the miner-sponsored WGC said. See full story.
"Safe haven flows continued to spur investor interest [in gold] in the first quarter," the WGC said in the report. "While jewelry and industrial demand are likely to continue to struggle in this environment, investment demand should remain well underpinned."
In gold exchange-traded funds, holdings in the SPDR Gold Trust , the largest ETF backed by gold, stood at 1,105.62 metric tons Tuesday, unchanged from a day ago.
In other metals trading Wednesday, July copper rose 2 cents, or 1%, to $2.0895 a pound.
Copper inventories at London Metal Exchange warehouses stood at 348,825 metric tons as of Tuesday, down 4,725 metric tons from the day before and 113,500 metric tons from a month ago, according to the exchange.
July silver gained 17.5 cents, or 1.2%, to $14.30 an ounce. The June palladium contract gave up $2.65, or 1.1%, to $236.75 an ounce, while July platinum gained $12.90, or 1.3%, to $1,158 an ounce.
