CH: Gold rises to one-month high as dollar's drop may revive demand
LONDON -- Gold climbed to a one-month high on speculation the withdrawal of government spending programs will erode the value of the dollar, reviving demand for the precious metal as an alternative investment.
Gold has climbed the past two weeks as the Federal Reserve signaled it's ready to remove emergency stimulus and reports in China and Australia signaled a stronger economic recovery. The dollar jumped 5.6 percent against the euro this year as investors sought the U.S. currency as a haven. “I wouldn't surprised if we have another wave of interest in gold as investors are bound to be concerned about currency volatility,” said Rhona O'Connell, managing director of GFMS Analytics Ltd. in London. The government spending after the worst global recession since World War II will also probably spur demand for gold as a hedge against inflation, she said.
Gold for immediate delivery gained as much as US$11.80, or 1.1 percent, to US$1,131 an ounce, the highest since Jan. 20, and was at US$1,122.72 at 9:36 a.m. local time. Gold for April delivery increased 0.1 percent to US$1,123.40 an ounce on the Comex division of the New York Mercantile Exchange.
The market was supported by demand in China and chart signals, O'Connell said. Prices of gold jumped 2.9 percent on the Shanghai Gold Exchange as trading resumed after a one-week holiday in China.
Gold's 10-day moving average crossed above the 20-day moving average. Prices may jump US$15 to US$20 an ounce in the next month, O'Connell said.
Silver for immediate delivery increased 0.5 percent to US$16.3975 an ounce, platinum added 0.4 percent to US$1,538.55 an ounce and palladium climbed 0.9 percent to US$442.75 an ounce.
The silver market is “preparing for a more sizeable upmove,” and buying the metal now could be an “attractive” trading opportunity, Tobias Merath, head of commodity research in the private banking division of Credit Suisse Group AG in Zurich, wrote in a report yesterday.
