By Miho Yoshikawa of Reuters
TOKYO - Gold rose on Monday to near $US1,100 per ounce after the US dollar edged down, helping bullion come off a one-month low hit in the previous session when commodities dipped on President Barack Obama's proposal to limit financial risk-taking.
Obama's plans to restrict banks or financial institutions from associating with a hedge fund or a private equity fund, which was unveiled on Thursday, caused stocks, the dollar and commodities to tumble.
Some market participants say, however, that fears in the commodities market about Obama's plan were out of proportion, and that gold would rise again.
Wong Eng Soon, an investment analyst at Singapore's Phillip Futures Pte Ltd, said: "It seems that the economy is improving and ... commodities will be able to appreciate as a whole."
But he said gold was unlikely to repeat last year's stellar performance, which took prices to a record high above $US1,220 in December.
"I don't think this year's gold price will be as high as last year's ... because as the economy gets stronger we shouldn't be expecting the funds to put their assets into a safe-haven asset, they'll want to take more risks," Wong said.
Gold benefited last year from a rise in investor interest in commodities as an alternative asset to stocks, bonds and cash due to the economic downturn from late 2008.
Spot gold was at $US1,098.90 per ounce as of 1403 AEDT, up about 0.7 per cent from New York's notional close of $US1,091.65. It touched a high of $US1,099.25.
Bullion hit a one-month low of $US1,081.90 on Friday, although the US dollar's decline provided some support.
US gold futures for February delivery rose 0.8 per cent to $US1,098.60 per ounce, compared to the $US1,089.70 settlement on the COMEX division of the New York Mercantile Exchange. It sank to a one-month low of $US1,081.90 on Friday.
Industrial metals platinum and palladium also rallied on Monday.
Spot platinum was at $US1,554.00 per ounce, up from $US1,546.50 in late New York, while spot palladium fetched $US434.75, up from $US430.50.
The two metals, valued for their use in automobile catalytic converters, have been trading at multi-month highs recently after the launch of US-based exchange-traded funds backed by the metals this month.
The world's largest gold-backed exchange-traded fund, SPDR Gold Trust , said its holdings stood at 1,111.922 tonnes as of January 22, unchanged from the previous business day.
Non-commercial net long US gold futures positions fell 3.4 per cent to 221,469 lots in the week to January 19 from 229,342 lots, a weekly report by the US Commodity Futures Trading Commission showed.
