SFC: Gold Caps Longest Rally in Since April as China Demand May Gain
Aug. 3 (Bloomberg) -- Gold prices rose, capping the longest rally in almost four months, as China, the world's second- biggest buyer, plans to relax rules on trading the metal, boosting prospects for demand.
China said today it will let more banks import and export gold and allow foreign companies more access to trading. Futures have climbed 8.3 percent this year after gaining for nine straight years. The dollar fell to a 15-week low against a basket of major currencies, boosting the appeal of the metal as an alternative investment.
"Investors are ready to flock into gold," said Michael K. Smith, the president of T&K Futures & Options in Port St. Lucie, Florida. "The dollar is going to stay weak. The news out of China is very bullish for the market. It's a huge deal."
Gold futures for December delivery rose $2.10, or 0.2 percent, to close at $1,187.50 at 1:40 p.m. on the Comex in New York. The price climbed for the fifth straight session, the longest rally since April 7.
"The news from China is a good sign and shows that they're continuing to look for assets to diversify," said Adam Klopfenstein, a senior market strategist at Lind-Waldock in Chicago. "The only thing I'm concerned about is that it's a bit of a shallow rally today. This is more of a long-term story and something that could possibly impact the demand-and-supply equation down the line."
Euro Climbs
The euro rose to the highest level in almost three months against the dollar.
Earlier this year, "the weakness in the euro was one reason why investors bought gold as a safe haven, but now a weaker dollar is a factor supporting gold again," said Peter Fertig, the owner of Quantitative Commodity Research Ltd. in Hainburg, Germany.
Gains were limited today as equity markets declined, Klopfenstein of Lind-Waldock said. The Standard & Poor's 500 Index fell from a 10-week high after a report showed U.S. consumer spending and income stagnated in June.
Kinross Gold Corp.'s purchase of Red Back Mining Inc. for $7.1 billion yesterday is a sign that producers expect prices to remain elevated, said Gijsbert Groenewegen, a partner at Gold Arrow Capital Management in New York.
Global gold-mining takeovers rose to a record this year as the price of the metal surged. Futures reached $1,266.50 on June 21, the highest level ever. India is the biggest buyer.
Silver futures for September delivery were little changed at $18.422 an ounce.
Platinum futures for October delivery dropped $15.10, or 0.9 percent, to $1,587.10 an ounce on the New York Mercantile Exchange.
Palladium futures for September delivery fell $9.40, or 1.8 percent, to $506.45 an ounce.
