BLBG: Gold Gains as Dollar Decline to One-Year Low Increases Appeal
By Kim Kyoungwha
Sept. 23 (Bloomberg) -- Gold advanced as a weakness in the dollar bolstered the precious metal’s appeal as an alternative investment.
The dollar declined to a one-year low against the euro on speculation Federal Reserve policy makers will signal today they will keep interest rates low. The U.S. currency fell against 13 of 16 major counterparts on concern that Group of 20 leaders, meeting in Pittsburgh starting tomorrow, will call for a reduction in global trade imbalances that may cause further gains in other currencies.
“Gold has attracted a lot of attention as the price continues to trade mostly in the $1,000 plus range,” said David Moore, a commodity strategist with Commonwealth Bank of Australia. “A lower dollar may generate investor interest in gold as a hedge against dollar weakness.”
Gold for immediate delivery gained as much as 0.5 percent to $1,019.03 an ounce and traded at $1,015.97 at 9:54 a.m. in Singapore. The metal reached a record high of $1,032.70 in March 2008.
Barclays Capital forecast gold may drive to a new high after a period of consolidation.
“We maintain a bullish bias for gold, expecting a test and break of the all-time high with potential for higher levels still into year-end,” Jordan Kotick and other technical analysts with Barclays wrote in a report.
Speculative Positions
Still, Eugen Weinberg, a commodity analyst with Commerzbank AG, cautioned that “very high” speculative net-long positions in gold could trigger a price correction if the dollar ends its “phase of pronounced weakness.”
The amount of gold held in ETF Securities Ltd.’s exchange- traded products expanded 0.3 percent to a record 8.323 million ounces on Sept. 21, from 8.297 million ounces on Sept. 18, according to the company’s Web site.
Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, were unchanged at 1,101.73 metric tons as of Sept. 22. The fund’s holdings, which have increased 41 percent this year, reached a record 1,134.03 tons on June 1.
Among other precious metals, silver slipped 0.2 percent $17.11 an ounce, platinum added 0.2 percent to $1,337 an ounce and palladium slid 0.7 percent to $301 an ounce as of 9:56 a.m. in Singapore.
