Gold Rises as Weaker Dollar Boosts Demand for Alternative Asset
Gold gained for the fourth time in five sessions as a weaker dollar increased demand for the precious metal as an alternative investment.
The Bloomberg Dollar Index, a gauge against 10 major currencies, fell as much as 0.4 percent, declining for the first time in three sessions. The greenback’s rally this year, up 3.7 percent through yesterday, contributed to a 19 percent drop in gold. The Federal Reserve’s Federal Open Market Committee meeting minutes are due tomorrow, when investors will look for clues on when it will reduce stimulus.
“The dollar is supporting the gold market,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates in Chicago, said in a telephone interview. “People will be looking for a clear indication from the Fed tomorrow.”
Gold futures for December delivery rose 0.5 percent to $1,372.60 an ounce at 1:42 p.m. on the Comex in New York, after dropping as much as 1 percent. Prices jumped 4.5 percent last week, the most since July 12.
Gold is headed for the worst annual drop since 1997 as some investors lost faith in the metal as a store of value. The Fed will probably begin to reduce the $85 billion of monthly debt buying in September, according to 65 percent of economists surveyed by Bloomberg from Aug. 9 to Aug. 13.
The precious metal jumped 70 percent from the end of December 2008 to June 2011 as the Fed bought more than $2 trillion in bonds to bolster the economy.
Silver futures for December delivery slid 0.4 percent to $23.118 an ounce on the Comex, after yesterday reaching a three-month high of $23.64. The metal’s 14-day relative-strength index was above for a fourth straight session, indicating to some investors who study technical charts that a decline may be imminent.
On the New York Mercantile Exchange, platinum futures for October delivery gained 1.1 percent to $1,525.50 an ounce. Palladium futures for September delivery slumped 0.4 percent to $749.65 an ounce.
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