BLBG: Gold Rises in London Trade, Erasing Loss, as Dollar Weakens
Gold rose in London as a decline in the dollar increased the metal’s appeal as an alternative investment. Silver also advanced.
The U.S. Dollar Index, a gauge of value versus six counterparts, fell 0.4 percent to 78.862, declining for a fourth consecutive day. Before closing yesterday, gold touched a 14- week peak and silver reached its highest in almost 10 months.
Investors continue “to track moves in the dollar, the key factor driving gold,” Pradeep Unni, an analyst at Richcomm Global Services in Dubai, said in a note. “As optimism grows that the worst of the economic downturn is over,” the correlation between gold and the dollar has returned, he said.
Bullion for immediate delivery added $2.01, or 0.2 percent, to $977.28 an ounce by 11:31 a.m. local time. The metal earlier fell as much as 0.6 percent. August futures lost $1.70, or 0.2 percent, to $978.30 an ounce on the New York Mercantile Exchange’s Comex division.
The metal slipped to $973.50 in the morning “fixing” in London, used by some mining companies to sell production, from $981.75 at yesterday’s afternoon fixing. Gold briefly traded above $1,000 in London on Feb. 20, the first time the metal had breached that price since March 2008, when it climbed to a record $1,032.70.
“The week is likely to be dominated by further developments on the currency market, with the rally possibly slowing down if the dollar holds above 79-78.5,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said in a note.
Gold Trust
Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, rose to a record 1,134.03 metric tons yesterday, the company’s Web site showed. That’s the first gain since May 22.
“One day of decent flows is not enough to change our minds on the near-term outlook for gold,” John Reade, UBS AG’s head metals strategist in London, said in a report. “We are seeing no strong physical gold investment and we hold our one-month forecast for gold at $950 an ounce.”
An ounce of gold now buys about 62.25 ounces of silver, according to data compiled by Bloomberg. The ratio fell to 62.20 on May 29, the lowest since September, and compares with 84 in October, the highest level since March 1995. Gold has climbed 10 percent this year and silver 37 percent.
Silver for immediate delivery in London rose 0.5 percent to $15.675 an ounce. Platinum was little changed at $1,213.40 an ounce, and palladium was 0.9 percent lower at $238.75 an ounce.
