BLBG: Gold Gains to Two-Week High on Weaker Dollar, Rising Oil Price
By Nicholas Larkin
July 15 (Bloomberg) -- Gold gained to the highest in almost two weeks in New York and 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 1 percent. Gold 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.”
Gold futures for August delivery climbed as much as $16.90, or 1.8 percent, to $939.70 an ounce on the New York Mercantile Exchange’s Comex division, the highest since July 2. The contract traded at $937 by 8:34 a.m. in New York. Bullion for immediate delivery in London gained 1.4 percent to $938.33.
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 are heading for their 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. The Labor Department today said consumer prices excluding food and fuel rose 0.2 percent, more than economists had predicted.
Gold “has certainly benefited from slightly better U.S. June retail sales, improving its attractiveness as an inflation hedge,” VTB Capital analyst Andrey Kryuchenkov said in London.
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, wrote today in a note. “We suspect that more of this activity will take place.”
Silver for September delivery climbed 3.2 percent to $13.335 an ounce in New York, the highest in a week. Platinum for October advanced 2.4 percent to $1,159.25 an ounce. Palladium for September was 2 percent higher at $247.82.
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
