Gold rose in New York and London as the declining dollar increased the metal’s appeal as an alternative investment. Silver climbed to a nine-month high. The U.S. Dollar Index, a six-currency gauge of the greenback’s value, fell as much as 1 percent today, heading for a fourth straight drop, on speculation that record U.S. borrowing will further weaken the dollar. Gold, which typically gains when the dollar falls, touched the highest in almost 14 weeks yesterday. Silver reached a nine-month high today. 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,” gold and the dollar have resumed moving in opposite directions, Unni said. Gold futures for August delivery rose $4.40, or 0.4 percent, to $984.40 an ounce on the New York Mercantile Exchange’s Comex division. Yesterday, the metal reached $990.20, the highest for a most-active contract since Feb. 24. Bullion for immediate delivery in London jumped $5.97, or 0.6 percent, to $981.24 at 7:12 p.m. local time. Silver futures for July delivery climbed 22 cents, or 1.4 percent, to $15.955 an ounce on the Comex. The price earlier touched $16.02, the highest for a most-active contract since Aug. 8. Silver jumped 27 percent last month, the biggest gain since April 1987. Testing $988 Gold “is now testing $988 resistance,” Andrew Chaveriat, a technical analyst at BNP Paribas SA in New York, said today in a report. “If broken, next resistance is at $1,006.” Resistance occurs when rising prices spur selling, slowing or blocking further advances and marking an upper limit to a trading range. The metal climbed to $980 an ounce in the afternoon “fixing” in London, used by some mining companies to sell their output, from this morning’s fixing of $973.50. “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” as tracked by the index, Andrey Kryuchenkov, an analyst at VTB Capital in London, said in a note. The index fell as low as 78.393 today. “Precious-metals markets are expected to continue their upward trends this week, with gold approaching $1,000 and silver $16,” Tom Pawlicki, an analyst at MF Global in Chicago, said today in a report. “Support will come from continued investment interest, the possibility of improving physical demand, and from growing tensions with North Korea.” Some investors buy gold as a store of value in times of political instability. North Korea provoked international condemnation by launching test missiles into the sea last week. On May 25, the Asian nation exploded an atomic device underground and later said it would no longer abide by the agreement that ended the Korean War in 1953. 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, the company’s Web site showed yesterday. The amount increased for the first time in six sessions. “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 today 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 61.5 ounces of silver in London, the lowest ratio since September, based on spot prices compiled by Bloomberg. That compares with almost 84.4 in October, the highest since March 1995. Before today, spot prices for gold climbed 11 percent this year and 37 percent for silver.

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