By Nicholas Larkin July 20 (Bloomberg) -- Gold climbed to a five-week high in London as a weaker dollar and higher oil boosted the metal’s appeal as an alternative investment and hedge against inflation. Platinum had its longest advance since September 2007. The U.S. Dollar Index, which measures the currency’s value against six monies, fell as much as 0.7 percent to a six-week low on speculation European and U.S. reports this week will show the global recession is easing, sapping demand for the greenback as a refuge. Oil climbed to the highest in almost two weeks. “The underlying driver is the dollar,” Dan Smith a Standard Chartered Plc analyst in London, said by telephone today. “There’s a general rally across the commodity complex.” Bullion for immediate delivery gained as much as $16.30, or 1.7 percent, to $953.80 an ounce, the highest since June 12. The metal, which climbed 2.7 percent last week, traded at $953.43 by 11:33 a.m. in London. August gold futures added 1.7 percent to $953.60 an ounce on the New York Mercantile Exchange’s Comex division. The metal rose to $952.25 in the morning “fixing” in London, used by some mining companies to sell production, from $937.50 at the afternoon fixing on July 17. Crude-oil futures, used by some investors as an indicator of the outlook for inflation, climbed as much as 1.8 percent to $64.72 a barrel in New York. The fuel advanced 6.1 percent last week, while the dollar index lost 1.1 percent. Gold tends to move inversely to the U.S. currency. ‘Positive Sentiment’ The MSCI World Index of shares gained for a sixth day today on optimism the first global recession since World War II is easing. A global recovery may trigger faster inflation. “There’s more positive sentiment for the economic outlook,” Smith said. “Gold is benefiting from that.” Eighteen of 32 traders, investors and analysts surveyed by Bloomberg News, or 56 percent, said bullion would gain this week as investors seek a hedge against inflation. Eleven forecast lower prices and three were neutral. “We are coming back to gold as a buyer this morning,” U.S. economist Dennis Gartman wrote in his Gartman Letter today. The fact “that the bond market is weakening and that the energy market is strengthening is forcing our hand.” Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, fell 0.3 metric ton to 1,094.54 tons on July 17, the company’s Web site showed. Silver for immediate delivery in London gained as much as 2.5 percent to $13.76 an ounce, the highest since July 2. The metal last traded at $13.695. Platinum gained for an eighth day, adding 0.8 percent to $1,186.25 an ounce. Palladium was 1.5 percent higher at $251.50 an ounce. UBS AG raised its one-month platinum forecast to $1,225 an ounce from $1,175, John Reade, the bank’s head metals strategist in London, said today in a report. UBS also increased its one- and three-month estimates for palladium to $240 an ounce, from $220 and $230 previously. To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net

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