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Gold Advances as Weakening Dollar, Signs of Global Slowdown Boost Demand
Gold climbed on signs of slower growth in the U.S. and China, and speculation that a weaker dollar will spur demand for the metal as an alternative asset.
The dollar slid to a nine-week low against the euro yesterday as U.S. manufacturing contracted in June by the most in a year and producer prices fell. U.S. retail sales declined for a second month in June, a July 14 report showed. The Dollar Index, a six-currency gauge of the dollar’s value, headed for a sixth weekly fall.
“The dollar is very weak now, which is actually propping up gold,” said Chris Yoo, manager of the global derivatives team at Seoul-based Samsung Futures Inc. “The dollar will affect bullion for the time being.”
Gold for immediate delivery in London climbed $2.30, or 0.2 percent, to $1,210.55 an ounce at 10:31 a.m. Seoul time. The August-delivery contract advanced 0.2 percent to $1,210.50 an ounce on the Comex in New York.
Gold climbed to an all-time high last month as investors sought to protect their wealth against the debt crisis in Greece and other European nations struggling to repay debt, and on concern that the global recovery may slow. The metal has gained 10 percent this year and is set for a 10th annual increase, the longest run of gains since at least 1920.
The Federal Reserve on July 14 cut its forecast for the U.S. economy’s expansion, and China said yesterday that the pace of growth dropped in the second quarter.
Sixteen of 24 traders, investors and analysts surveyed by Bloomberg, or 67 percent, said that bullion will climb next week.
Silver for immediate delivery was little changed at $18.3325 an ounce, while platinum gained 0.3 percent to $1,534.35 an ounce and palladium dropped 0.5 percent to $465.50 an ounce.
To contact the reporter on this story: Sungwoo Park in Seoul at spark47@bloomberg.net
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