Gold advanced on rising demand for the precious metal as a hedge against inflation after US housing starts increased in June, adding to signs the world's biggest economy is stabilising. Silver also gained.
Home-building starts rose 3.6 per cent to an annual rate of 582,000, the highest since November, the Commerce Department said today in Washington. Building permits, a sign of future construction, jumped the most in a year. Crude-oil futures, used by some investors as an inflation indicator, advanced. Some investors use gold as a store of value.
``Fresh buying will be supported by a weakening dollar and a build in inflation expectations,'' Suki Cooper, a Barclays Capital analyst in London, said today in a report.
Gold futures for August delivery gained $US2.10, or 0.2 per cent, to $US937.50 an ounce on the New York Mercantile Exchange's Comex division.
Bullion for immediate delivery in London advanced $US1.24, or 0.1 per cent, to $US938.59 an ounce at 7:21 p.m. local time.
Silver futures for September delivery increased 16.8 cents, or 1.3 per cent to $US13.403 an ounce in New York.
Gold ``will continue to look to both the dollar and broader market movement for direction,'' James Moore, an analyst at TheBullionDesk.com in London, said today in a note.
The metal rose to $US937.50 in the London afternoon ``fixing,'' the price used by some mining companies to sell their output, from $US934.50 in the morning fixing.
Dollar Index
The US Dollar Index, a six-currency gauge of the greenback's value, was headed for a loss of about 1 per cent for the week. Gold, which tends to rise when the dollar falls, rose 2.7 per cent this week after two straight weekly drops.
Crude-oil futures climbed as much as 3.2 per cent in New York, nearing $US64 a barrel. Oil headed for a weekly increase of more than 6 per cent.
``We expect markets to become thinner and more volatile'' in the next several weeks, Moore said. He predicted gold will trade between $US905 and $US950 an ounce.
Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, rose 0.3 metric ton to 1,094.85 tons as of yesterday, the company's Web site showed. That's the first increase since the fund reached a record 1,134.03 tons almost seven weeks ago.
