Gold climbed to a record for a third day and crude oil advanced in New York as the dollar’s drop toward a two week-low prompted investors to buy commodities as a hedge against potential inflation.
Bullion is heading for a ninth annual gain as the Dollar Index, a six-currency gauge of the dollar’s value, has shed 6.5% this year. Oil has gained 58% since the start of the year on concern that record government spending to combat the global recession will devalue currencies, spurring inflation.
“There is such a premium in crude right now that comes down to the inflation hedge,” said Jonathan Kornafel, a director at options traders Hudson Capital Energy in Singapore. “There has been more focus on the dollar this week.”
Crude oil for November delivery gained as much as 83 cents, or 1.2%, to 70.40 a barrel in electronic trading on the New York Mercantile Exchange. It was at 70.21 at 11:47 a.m. Singapore time. Yesterday, the contract dropped 1.31.
Gold for immediate delivery climbed as high as 1,051.51 an ounce and was at 1,050.13 an ounce at 11:45 a.m. in Singapore. It has risen 16% over the past year. Gold for December delivery in New York gained as much as 0.8% to 1,052.50 an ounce, also a record.
2,000 Gold
Gold may top 2,000 an ounce in the next decade, according to investor Jim Rogers. “People are printing money, gold is going up,” Rogers said in an interview, adding that he may add to his holdings. “There are plenty of reasons to buy gold when the time is right.”
President Barack Obama has increased US marketable debt to a record as he borrows to reignite growth in the world’s biggest economy. That’s boosted speculation the increased money supply will debase the currency and spur inflation. The printing of money and “abandonment of the dollar have taken the smart people over to precious metals,” according to Philip Gotthelf, president of Equidex Brokerage Group Inc.
The dollar traded at 1.4762 against the euro at 11:20 a.m. in Singapore, from 1.4691 yesterday. The US currency fell earlier this week on concern the Federal Reserve will be slower to raise interest rates than policy makers in other nations.
A further blow to the dollar came after an Oct. 6 report in Britain’s Independent newspaper said that Arab states may switch to a basket of currencies to set oil prices over the next nine years. The Saudi Central Bank Governor Muhammad al-Jasser denied such a move is being considered.
‘Have an Impact’
“There was no reason for the dollar to be affected now,” said Hudson Capital’s Kornafel. “But if anything it does have an impact on the dollar now because it shows that sentiment is there for a movement away from the dollar.”
Australia’s central bank unexpectedly raised its overnight cash rate target to 3.25% on Oct. 6, the first Group of 20 nation to boost lending costs since the height of the global financial crisis. The country today reported an unexpected gain in employment, leading to an increase in speculation of a further climb in the benchmark.
Brent crude oil for November settlement gained as much as 88 cents, or 1.3%, to 68.08 a barrel on the London-based ICE Futures Europe exchange. It was at 67.99 at 11:33 a.m. in Singapore. Yesterday, the contract fell 2%.
