BLBG: Gold Advances to Two-Week High as Weaker Dollar Boosts Demand
By Nicholas Larkin and Luzi Ann Javier
Feb. 16 (Bloomberg) -- Gold rose for a second day in London to the highest price in almost two weeks as a weaker dollar increased the metal’s appeal as an alternative investment.
The U.S. Dollar Index, a six-currency gauge of the greenback’s value, slipped as much as 0.5 percent as gains in equities and improving corporate earnings reduced demand for the safest assets. The dollar also fell amid speculation the euro’s recent losses, prompted by Greece’s financial turmoil, were too rapid. Gold typically moves inversely to the dollar.
“Commodity prices are firming as the dollar weakens,” Dennis Gartman, a Suffolk, Virginia-based economist and hedge- fund manager, said in his Gartman Letter today. “The world has become disdainful of currencies generally, and is wrapping its collective arms around gold as the most readily available reservable and believable currency.”
Gold for immediate delivery gained as much as $15.95, or 1.5 percent, to $1,117.05 an ounce, the highest intraday level since Feb. 3. The metal was at $1,113.80 at 9:39 a.m. local time. Bullion for April delivery was 2.2 percent higher at $1,114.30 on the New York Mercantile Exchange’s Comex unit.
The dollar has strengthened this year as the euro slumped on concern about sovereign debts in Europe. The EU will impose “additional measures” on Greece to satisfy the European Commission if needed, Luxembourg Prime Minister Jean-Claude Juncker said yesterday. European finance ministers meet again today.
Equities Advance
“It will be the U.S. dollar play that will affect commodities,” said Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney. “If we get relief from the EU in terms of a solid outcome, then we’ll get a rally in the euro, and obviously that will cause weakness in the U.S. dollar.”
Europe’s Dow Jones Stoxx 600 Index of shares gained as much as 1 percent as Barclays Plc said 2009 profit more than doubled and Australian lender Westpac Banking Corp.’s profit climbed.
Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, were unchanged for a fifth day at 1,106.38 metric tons yesterday, according to the company’s Web site.
Silver for immediate delivery in London rose 1.8 percent to $15.8325 an ounce. Platinum gained 1.3 percent to $1,534.50 an ounce and palladium climbed 1.9 percent to $429 an ounce.
Floor trading on Comex was shut yesterday for the Presidents Day holiday.
To contact the reporters on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net; Nicholas Larkin in London at nlarkin1@bloomberg.net.
