BLBG: Gold, Trading Near Record, May Rise as Dollar Drop Spurs Demand
Oct. 6 (Bloomberg) -- Gold, trading near a record in London, may advance for a third day as a tumbling dollar spurs demand for the precious metal as an alternative investment.
The dollar fell as much as 0.7 percent against the euro after Australia unexpectedly raised interest rates and Britain’s Independent newspaper said Arab states held talks on replacing the dollar in oil trades. Saudi Arabia’s central bank said it’s not involved. Gold tends to gain when the dollar weakens.
“With the dollar back on the defensive, the metal appears on course to challenge last month’s high and ultimately last year’s all-time high,” James Moore, an analyst at TheBullionDesk.com in London, said in a note.
Immediate-delivery bullion rose as much as $4.35, or 0.4 percent, to $1,021.65 an ounce, the highest price since Sept. 17, and was at $1,019.25 by 9:23 a.m. local time. December gold futures were 0.2 percent higher at $1,019.70 an ounce on the New York Mercantile Exchange’s Comex division.
The commodity climbed to $1,024.28 on Sept. 17 in London, the highest price since reaching a record $1,032.70 in March 2008. Bullion is heading for a ninth consecutive annual gain, the longest advance since at least 1949.
The dollar weakened after Australia’s central bank raised its benchmark rate a quarter point to 3.25 percent and signaled further increases. Saudi Arabia’s central bank Governor Muhammad al-Jasser denied the country is in talks to substitute the currency. The Independent said Persian Gulf states along with Japan and China discussed dropping the dollar, citing unnamed sources.
Dollar ‘Fragility’
“The fragility of the dollar is generating investor interest in gold,” David Moore, commodity strategist at Commonwealth Bank of Australia, said from Sydney.
Gold has risen about 2.5 percent in the past month as the U.S. Dollar Index, a six-currency gauge of the greenback’s value, fell 2.3 percent. The measure slid to a 13-month low on Sept. 23.
Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by the metal, expanded for a second day to 1,098.07 metric tons yesterday, data on the company’s Web site showed. The trust’s holdings are 3.2 percent less than the record 1,134.03 tons on June 1.
Among other precious metals for immediate delivery in London, silver gained 1.3 percent to $16.8425 an ounce. Platinum added 0.6 percent to $1,303 an ounce while palladium dropped 0.7 percent to $299 an ounce.
To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net
