SF: Gold Rises Most in Seven Weeks as China's Plans Boost Demand
Aug. 4 (Bloomberg) -- Gold rose the most in seven weeks on speculation that China's plans to relax rules on trading will bolster demand.
China's said yesterday it would let more banks import and export gold and give foreign companies greater access to trading. China is the world's second-largest gold buyer and biggest producer. Earlier, the precious metal reached $1,205.50 an ounce in New York, the highest level since July 16.
The Chinese plans are "mildly bullish," raising the possibility of "increased demand as they become more open to trading and encourage investors to buy more gold," said Dan Smith, an analyst at Standard Chartered Plc in London.
Gold futures for December delivery rose $14.20, or 1.2 percent, to $1,201.70an ounce at 10:52 a.m. on the Comex in New York. A close at that price would mark the biggest gain for a most-active contract since June 17. The price was up for a sixth session, heading for the longest advance since November.
Investors have increased purchases of the precious metal after economic data renewed concern that the recovery is slowing, Smith said. Gold climbed 2.2 percent in the previous five sessions.
Pending sales of U.S. homes unexpectedly fell in June and factory orders declined more than forecast, reports showed yesterday. The dollar fell to a three-month low against a basket of six major currencies.
'Deflation Worries'
"People are piling into gold because they're worried about deflation," said Matt Zeman, a metals trader at LaSalle Futures Group in Chicago. "They are buying hard assets with the dollar down."
The metal may reach $1,350 in the next couple of months, Zeman said. "The sky is the limit" with economic fears, he said.
Silver futures for September delivery added 10.3 cents, or 0.6 percent, to $18.525 an ounce in New York, after reaching $18.70, the highest price since June 30.
Platinum futures for October delivery gained $1.90, or 0.1 percent, to $1,589 an ounce.
Palladium futures for September delivery declined $4.35, or 0.9 percent to $502.10 an ounce.
--With assistance from Feiwen Rong and Zhe Huang in Beijing and Kyoungwha Kim in Singapore. Editors: Michael Arndt, Patrick McKiernan.
