BLBG: Gold Rises in New York, London on Higher Oil Prices, Dollar
July 14 (Bloomberg) -- Gold rose in New York and London as higher oil prices and a weaker dollar increased demand for bullion as an alternative investment and hedge against rising consumer prices.
Crude-oil futures, used by some investors as an indicator of the outlook for inflation, gained for the first time in three days on speculation demand will rebound as the world economy recovers. The U.S. Dollar Index, which measures the greenback’s value against six foreign currencies, fell for a second day, losing as much as 0.3 percent. European and Asian equities rose.
“Crude prices are higher, and the big driver of inflation is energy prices,” Jesper Dannesboe, a senior commodity strategist at Societe Generale SA in London, said by phone. “The dollar also has a little bit of an impact.”
Gold futures for August delivery added $1.90, or 0.2 percent, to $924.40 an ounce on the New York Mercantile Exchange’s Comex division by 8:38 a.m. in New York. Bullion for immediate delivery in London gained 0.5 percent to $924.40 an ounce.
The metal rose to $921.75 in the morning “fixing” in London, used by some mining companies to sell production, from $908.50 at yesterday’s afternoon fixing.
Crude oil gained as much as 2.8 percent to $61.36 a barrel in New York today. The fuel has slid 13 percent this month as gold futures have lost 0.3 percent. The MSCI World Index of shares today reached a one-week high, adding as much as 1.1 percent.
Inflation Hedge
“Gold is still trading on an inflation outlook,” Dannesboe said. “Therefore the more optimistic the economy is, the more chance of inflation.”
Sales at U.S. retailers rose more than forecast in June, Commerce Department figures showed today in Washington. Prices paid to U.S. producers rose in June by twice as much as anticipated, the Labor Department said today in Washington.
Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, was unchanged at 1,109.81 metric tons for a third day yesterday, the company’s Web site showed.
“While Indian demand remains very weak, there are signs of light to moderate jewelry industry buying from other centers” which “may also be giving moderate support to the gold market,” John Reade, UBS AG’s head metals strategist in London, said today in a note.
Silver for September delivery added 0.4 percent to $12.90 an ounce in New York. Platinum for October rose 1.3 percent to $1,131.50 an ounce. Palladium for September was 1.4 percent higher at $238.50 an ounce.
Palladium held in ETF Securities Ltd.’s exchange-traded commodities climbed 4.1 percent to a record 329,068 ounces yesterday, according to the company’s Web site.
