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Gold Rises Most in Three Weeks as Alcoa Profit Spurs Raw-Material Rally
Gold prices rose the most in three weeks on speculation that a recovery in the global economy will boost demand for commodities.
U.S. equities rallied for the sixth straight session after Alcoa Inc., the largest U.S. aluminum producer, reported profit that topped analysts’ estimates. The Reuters/Jefferies CRB Index of 19 raw materials rose as much as 1.5 percent. Gold has gained 11 percent this year.
“Gold is rallying on the heels of positive sentiment,” said Adam Klopfenstein, a senior market strategist at Lind- Waldock, a broker in Chicago. “We see strength in a host of commodities. This is a positive correlation with equities.”
Gold futures for August delivery rose $14.80, or 1.2 percent, to $1,213.50 an ounce on the Comex in New York, the biggest gain for a most-active contract since June 17.
Yesterday, the price settled below $1,200 for the fourth time in five sessions.
“Gold tried repeatedly to break down below $1,200, but the buyers kept coming back,” said Matt Zeman, a trader at LaSalle Futures Group in Chicago. “This is a short-covering rally.”
Yesterday, assets in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, rose 0.3 metric ton to 1,314.82 tons, marking the first increase since June 29.
Portugal’s Debt Rating
Gold also rallied after Portugal’s debt rating was cut two levels to A1. Moody’s Investors Service cited the country’s growing debt burden and weak economic prospects. The metal reached a record $1,266.50 on June 21 and all-time highs in euros, U.K. pounds and Swiss francs last month amid Europe’s credit crisis.
“The downgrade is a signal to the market that the situation is not over,” said Bernard Sin, the head of currency and metal trading at bullion-refiner MKS Finance SA in Geneva. “There is still long-term fear because of uncertainty.”
Silver futures for September delivery jumped 34 cents, or 1.9 percent, to $18.257 an ounce.
Platinum futures for October delivery gained $20.10, or 1.3 percent, to $1,535.40 an ounce on the New York Mercantile Exchange.
Palladium futures for September delivery surged $15, or 3.3 percent, to $469.15 an ounce.
To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net;
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