BLBG: Gold, Silver Post Biggest Gains in Four Weeks as Dollar Slumps
By Pham-Duy Nguyen and Nicholas Larkin
Sept. 30 (Bloomberg) -- Gold and silver prices posted the biggest gains in almost four weeks as the dollar slid, sparking demand for the metals as alternative investments.
The greenback dropped as much as 0.8 percent against a basket of six major currencies. This quarter, gold jumped 8.8 percent, the most since the three months ended March 31, 2008. The metal has climbed 14 percent this year, while the dollar was down 5.7 percent.
“The bounce today is all about how the dollar got clobbered,” said Matt Zeman, a trader at LaSalle Futures Group in Chicago. “Gold would clearly need resumption in dollar weakness in order to go much higher.”
Gold futures for December delivery climbed $14.90, or 1.5 percent, to $1,009.30 an ounce on the Comex division of the New York Mercantile Exchange, the biggest gain for a most-active contract since Sept. 3. The settlement was the first above $1,000 in a week.
Silver futures for December delivery jumped 48 cents, or 3 percent, to $16.658 an ounce, the steepest increase since Sept. 3. This quarter, the metal soared 22 percent, the most since the period ended March 31, 2006.
Spot gold for immediate delivery rose 1.6 percent to $1,008.10 an ounce at 2:02 p.m. New York time.
Last week, gold futures fell 1.9 percent, snapping a five- week rally.
Interest Rates
“Gold dropped enough for people to see some value,” said Tom Hartmann, an analyst at Altavest Worldwide Trading LLC in Mission Viejo, California. “The trend in the dollar is not changing soon. It’s going to take the Fed tightening interest rates for the dollar to really bottom and head higher.”
The Federal Reserve has kept its target lending rate at a record-low range of zero to 0.25 percent since December.
Futures advanced to an 18-month high of $1,025.80 on Sept. 17 and reached a record $1,033.90 in March 2008. The commodity is heading for the ninth straight annual gain. Holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, have climbed 40 percent this year.
Imports by India, the world’s biggest purchaser of the metal, probably fell for a fifth month in September to 50 tons, from 54 tons a year earlier as rising prices deterred jewelry buyers, said Harmesh Arora, a vice president at the Bombay Bullion Association Ltd.. Imports last month were 21.8 tons, compared with 98 tons a year earlier.
“We have seen modest improvement in demand from Indian clients, but overall sales to this important country remain well down,” John Reade, the head metals strategist at UBS AG in London, said in a report. “Very strong buying would probably require a gold price close to $900.”
Gold may decline after failing to top the record this month, Zeman said.
“I suspect the buying interest will wane above $1,000 again,” Zeman said.
To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.
