ID: Gold prices close at 3-month high as dollar sinks
NEW YORK — Gold prices continued their climb Friday, closing at a three-month high as the dollar sank to fresh multimonth lows against other major currencies.
Gold tends to move inversely with the dollar because investors use it as a hedge against inflation, which can be ignited by a weak greenback.
The U.S. currency has been under pressure in recent weeks as investors worry that the flood of money the government is pumping into the system to stimulate the economy will weaken the dollar's purchasing power.
That fear was exacerbated this week after Standard & Poor's warned it could cut its rating on U.K. debt because of the massive amounts the British government is borrowing to prop up its financial system and boost its economy. That set off fears that the U.S. government's own AAA credit rating might also be in trouble.
Gold for June delivery added $7.70 to settle at $958.90 an ounce on the New York Mercantile Exchange - the highest close since February 25. Prices gained 3 percent this week and are up 8.4 percent for the year.
Other metals also rose. July silver jumped 25 cents to $14.6950 an ounce, while July copper futures rose 4.65 cents to $2.0975 a pound.
On Wall Street, investors set aside some of their initial worries about the government's debt levels and bought up shares of retail stocks. The market moved moderately higher in a quiet day of trading, after falling earlier this week.
Energy prices inched higher on the Nymex ahead of the long Memorial Day weekend, which kicks off the summer driving season.
Light, sweet crude for July delivery rose 62 cents to $61.67 a barrel. Gasoline futures rose 3.89 cents to $1.8107 a gallon. Heating oil futures rose less than a penny to $1.5642 a gallon.
Grain prices mostly rose on the Chicago Board of Trade.
July wheat futures jumped 19 cents to $6.1250 a bushel, while corn for July delivery gained 6.25 cents to $4.3025 a bushel.
