GOLD rose in New York and London after 2 straight declines as rising equity markets signaled increased willingness to take on risk, weighing on the dollar.
The Dollar Index, a gauge of the currency’s value against six counterparts, fell as much as 0.6% after adding 1.3% in the prior 2 days, when gold dropped 2.5%. The dollar and gold tend to move inversely. The MSCI World Index of shares rose as much as 0.7% after 2 losses in a row.
Gains in equities are a sign of “falling risk aversion,” which may reduce demand for the dollar, pushing gold higher, said Carsten Fritsch, a Commerzbank AG analyst in Frankfurt.
Gold futures for December delivery climbed 0.6% to $935.50 an ounce in early trading on the New York Mercantile Exchange’s Comex division. Bullion for immediate delivery rose 0.4% to $933.67 an ounce. The metal is heading for a weekly drop after 2 straight weeks of gains.
“The dollar is likely to go lower, and thus gold higher today,” David Thurtell, an analyst at Citigroup Inc. in London, said by e-mail.
Bullion climbed to $932 an ounce in the morning “fixing” in London, used by some miners to sell production, from $931 at yesterday’s afternoon fixing, according to data on Bloomberg.
Investors sold another 10.38 metric tons of gold from the SPDR Gold Trust, the biggest exchange-traded fund holding bullion, according to the company’s Web site.
Gold gained last week even as investors cut ETF holdings. A lack of jewelry demand to absorb sales may “suggest downward moves could be magnified,” said James Moore, an analyst at TheBullionDesk.com in London. Gold is likely to remain dependent on movement in the dollar and equities, he said.
Purchases from India, the largest gold buyer, matched the highest sales for this year after yesterday’s price drop, UBS AG metals strategist John Reade wrote in a report today.
“In volume terms, yesterday’s sales were about a quarter of the peak seen in August 2008,” Reade wrote. “We need to see sustained strong Indian demand to start thinking about calling a strong support in gold and suspect that this will only be seen at lower prices or in a month or so.”
Platinum futures for October delivery gained 0.9% to $1,182.90 an ounce, palladium rose 0.5% to $256.75 an ounce, and silver climbed 1.5% to $13.45 an ounce.
