July 15 (Bloomberg) -- Gold rose to the highest in almost two weeks in London as a weaker dollar and higher oil prices boosted the metal’s appeal 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, climbed for the first time in four days. The U.S. Dollar Index, which measures the greenback’s value against six foreign currencies, dropped as much as 0.8 percent. The metal, set for the longest streak of gains since May, tends to move inversely to the U.S. currency. “Gold is steadily ticking higher, and recent dollar weakness and the gain in oil prices are favoring the move,” Pradeep Unni, a Richcomm Global Services analyst in Dubai, wrote today in a report. “Gold has enough potential to rise higher at least toward $935-$940,” while declines “toward $915-$920 could be utilized as buying opportunities.” Bullion for immediate delivery climbed as much as $10.29, or 1.1 percent, to $935.99 an ounce, the highest since July 2. The commodity traded at $934.15 by 12:31 p.m. in London. August gold futures gained 1.2 percent to $933.90 an ounce on the New York Mercantile Exchange’s Comex division. The metal rose to $930 in the morning “fixing” in London, used by some mining companies to sell production, from $924.75 at yesterday’s afternoon fixing. Spot prices, which reached a record $1,032.70 in March 2008, are heading for the first weekly gain in three. Oil Climbs Crude oil gained as much as 2 percent to $60.69 a barrel in New York today. U.S. gasoline inventories fell 69,000 barrels last week, the industry-funded American Petroleum Institute said yesterday. The country is the world’s largest energy consumer. Reports yesterday showed June sales at U.S. retailers rose more than forecast and prices paid to U.S. producers climbed twice as much as projected. Today the Labor Department may say consumer prices excluding food and fuel rose 0.1 percent for a second month, according to the median forecast in a Bloomberg News survey. Gold “has certainly benefited from slightly better U.S. June retail sales, improving its attractiveness as an inflation hedge,” said Andrey Kryuchenkov, a VTB Capital analyst in London. “Inflation expectations will remain subdued at least until the end of the year, and we do not expect inflation concerns to intensify significantly until 2010.” Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, fell 1.4 percent to 1,094.54 metric tons yesterday, the company’s Web site showed. The fund reached a record 1,134.03 tons in June. Einhorn Opts for Bullion Greenlight Capital Inc. switched all its SPDR holdings into bullion during the second quarter because costs to store physical gold are lower than the SPDR fees, it told investors yesterday. David Einhorn, who runs the $5 billion hedge fund, told clients in January he was buying gold for the first time amid the threat of inflation from higher government spending. “Clearly some of the declines in the SPDR last quarter were associated with switching gold exposure, rather than selling,” John Reade, UBS AG’s head metals strategist in London, said today in a note. “We suspect that more of this activity will take place.” Silver for immediate delivery in London rose 2.6 percent to $13.25 an ounce, the highest in a week. Platinum gained 1.9 percent to $1,154.25 an ounce, and palladium was 0.9 percent higher at $245.25 an ounce. Silver held in Barclays Plc’s iShares Silver Trust, the biggest exchange-traded fund backed by the metal, gained 0.5 percent to a record 8,766.9 tons yesterday, according to the company’s Web site. To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net

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