BLBG; Gold Climbs to One-Week High on Speculation Dollar to Decline
Gold futures rose to a one-week high on speculation the dollar will slump, boosting the appeal of the precious metal as an alternative investment. Silver and platinum also climbed.
Gold jumped 1.6 percent yesterday as the dollar dropped against the euro. Some investors bet on “negative data” from results of stress tests on U.S. banks, said Manqoba Madinane, an analyst at Standard Bank Group Ltd. in Johannesburg.
“The euro/dollar is the main factor at the moment,” Madinane said.
Gold futures for June delivery climbed $2.10, or 0.2 percent, to $904.30 an ounce on the Comex division of the New York Mercantile Exchange. Earlier, the metal reached $916.70, the highest since April 27.
Gold for immediate delivery fell $5.10, or 0.6 percent, to $897 at 4:58 p.m. New York time as the dollar rebounded. Federal Reserve Chairman Ben S. Bernanke said the U.S. economic contraction may be easing.
The metal may climb to $925 as early as this week on bullish chart signals, Eugen Weinberg, an analyst at Commerzbank AG in Frankfurt, said before the Bernanke comments.
Gold will average $980 in the fourth quarter, as the dollar falls to $1.45 a euro in 12 months, according to Barclays Capital. Gains in the metal may slow as prices over $900 curb demand from jewelers, the biggest users of the metal, said Suki Cooper, an analyst at Barclays in London.
Bank Capital
About 10 U.S. banks need additional capital to weather a deeper recession, so-called stress tests may show, people familiar with the matter said. Many of the 19 lenders under review and the government are set to discuss the examinations after markets close May 7, the people said.
Gold has climbed 2.3 percent this year in New York, partly because some investors bought the metal as a hedge against declines in equity markets. Holdings in the SPDR Gold Trust, the biggest exchange-traded fund in gold, were at 35.5 million ounces today, unchanged since April 23.
“Investment flows are very important for the market, and we haven’t seen much in the way of new flows,” Madinane of Standard Chartered said.
Silver futures for July delivery rose 30.7 cents, or 2.3 percent, to $13.42 an ounce. Earlier, the price reached $13.615, the highest since March 26. The metal has climbed 19 percent this year.
Platinum futures for July delivery rose $15.90, or 1.4 percent, to $1,137.90 an ounce on the Nymex. Palladium futures for June delivery climbed 60 cents, or 0.3 percent, to $222.90 an ounce.
