BLBG: Gold May Gain as Demand Rises on Dollar, Surging Food Prices
Aug. 9 (Bloomberg) -- Gold, little changed, may climb on speculation demand for the metal as a store of value may grow as the dollar weakens on signs that the U.S. economic recovery has slowed and surging food prices spur inflation concerns.
Gold for immediate delivery traded at $1,205.500 an ounce at 1:58 p.m. Seoul time after gaining 2.1 percent last week, the first weekly advance since June 18. Wheat in Chicago jumped to a 23-month peak last week following Russia’s ban on grain exports, pushing prices for corn, soybeans and rice higher.
“Bullion may get a boost from surging wheat prices that has stoked concern over food inflation,” said Hwang Il Doo, a senior trader at KEB Futures Co. in Seoul. “Agflation” may play a key role in setting the direction for gold in coming days, together with the dollar, he said.
Gold for December delivery rose 0.2 percent to $1,207.60 on the Comex in New York, gaining for a ninth straight day, the longest rally since November.
The dollar traded near the weakest level in three months against the euro after a U.S. report showed companies hired fewer workers than forecast, signaling the labor-market recovery will be slow to take hold. The dollar traded at $1.3284 per euro from $1.3280, after touching $1.3334 on Aug. 6, the weakest level since May 3.
Gold could continue to be supported by a weaker dollar, Hussein Allidina, New York-based head of commodity research with Morgan Stanley, wrote in an Aug. 8 report.
On Aug. 6, wheat prices reached $8.68 a bushel, the highest level since Aug. 26, 2008, following a Russian ban on grain exports. That was more than double this year’s low of $4.255 on June 9. The most-severe drought in at least 50 years slashed output in Russia, and adverse weather in Canada, Ukraine and the European Union hurt crops.
Silver for immediate delivery was little changed at $18.48 an ounce, platinum fell 0.9 percent to $1,560.50 an ounce and palladium declined 0.5 percent to $489.50 an ounce.
--With assistance from Sungwoo Park in Seoul. Editor: Matthew Oakley.
To contact the reporter on this story: Jae Hur in Tokyo at jhur1@bloomberg.net; Sungwoo Park in Seoul at spark47@bloomberg.net.
To contact the editor responsible for this story: Jim Poole at jpoole4@bloomberg.net
