FU: Gold extends gains to 4-week high amid global inflation concerns
Futures Pros – Gold futures extended gains on Tuesday, jumping to a four-week high as concerns over accelerating global consumer prices boosted the appeal of the previous metal as a hedge against inflation.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,373.45 a troy ounce during European afternoon trade, jumping 0.83%.
It earlier rose to USD1,374.15 a troy ounce, the highest price since January 19.
The U.K. Office for National Statistics said earlier in the day that the rate of consumer price inflation rose in line with expectations to the highest level since November 2008, rising to 4.0% in January, up from 3.7% in December.
In his letter to U.K. finance minister George Osborne following the report, Bank of England governor Mervyn King said inflation was likely to rise towards 5% in the coming months, significantly higher than the bank’s 2% target.
Also Tuesday, China’s statistics bureau said consumer prices rose 4.9% last month from a year earlier compared with a 4.6% gain in December, disappointing expectations for a 5.4% increase.
The weaker-than-expected inflation figure eased concerns of more aggressive monetary tightening measures by Beijing that could curb demand for the precious metal.
China, the world's second largest gold consumer, imported approximately 209 metric tons through the first ten months of 2010, up from 45 tons in all of 2009, according to the Shanghai Gold Exchange.
Meanwhile, the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.32% during European afternoon trade.
A weaker dollar tends to lift gold, as it boosts its appeal as an alternative asset and makes dollar-priced commodities less expensive for holders of other currencies, though the relationship has weakened in recent weeks.
Elsewhere, silver for March delivery gained 0.37% to trade at a six-week high of USD30.71 a troy ounce, while copper for March delivery slumped 0.78% to trade at USD4.592 a pound during European afternoon trade.
