Gold Rises to Two-Week High as Falling Dollar Boosts its Appeal
Dec. 28 (Bloomberg) -- Gold rose to its highest in two weeks as a weakening U.S. dollar increased the appeal of bullion as an alternative investment.
Gold for immediate delivery has gained 4 percent in six days, as investors bought the precious metal to diversify from stocks, bonds and currencies amid concern over inflation. The commodity has risen 16 percent this year and is headed for its fifth annual gain on demand from jewelers and investment funds.
``It's going to be fairly quiet to the end of the year, and will be driven by the U.S. dollar,'' said Ron Cameron, a metals analyst at Ord Minnett Ltd. in Sydney. ``The weaker dollar will push up gold a bit in the short term.''
Gold for immediate delivery rose as much as $3, or 0.6 percent, to $510.90 an ounce, the highest intraday price since Dec. 14. It traded at $509.61 at 4:11 p.m. Singapore time. The metal reached $541 on Dec. 12, the highest since January 1981.
The euro rose the most in more than two weeks against the dollar after a report showed German consumer confidence rose to a six-month high. The dollar traded at $1.1923 to the euro at 4:12 p.m. Singapore time from $1.1826 in late New York trading yesterday, according to electronic foreign-exchange dealing system EBS.
``It looks like an overall consensus that gold will be used as a hedge against currency fluctuations. People are putting their wealth into the metals market instead of having it in currencies like the euro and dollar,'' Mike Sander, an analyst and broker at Altavest Worldwide Trading Inc., said from California yesterday.
Tokyo
Gold futures in Tokyo rose for the fourth day to a two-week high as Japanese investors, flush with cash from the country's surging equity market, sought out other investments, Koichiro Kamei, managing director and gold strategist of Market Strategy Institute, said today.
``The investors have profits from the stock market and so they have a bigger appetite for risk. They think gold prices will continue to rise next year,'' he said by phone from Tokyo.
Gold for delivery in December 2006 rose 10 yen, or 0.5 percent, to settle at 1,940 yen a gram, or 60,334 yen ($515) an ounce on the Tokyo Commodity Exchange. That's the highest closing price since Dec. 14.
The exchange has cut the daily maximum fluctuation limit for gold contracts to 60 yen a gram from 75 yen starting Jan. 4.
Comex
The Nikkei 225 Stock Average, a price-weighted average of 225 top-rated companies listed in the First Section of the Tokyo Stock Exchange, surged 41 percent this year to a five-year high.
Gold for delivery in February rose as much as $3.40, or 0.7 percent, to $513.50 an ounce in after-hours trading on the Comex division of the New York Mercantile Exchange. It traded at $511.90 at 4:20 p.m. Singapore time.
In India, the world's biggest consumer, gold prices for February delivery rose 24 rupees, or 0.3 percent, to 7,554 rupees per 10 grams, or 23,492 rupees ($519) per ounce, at 1:25 p.m. on the Multi Commodity Exchange of India Ltd. in Mumbai.
To contact the reporters on this story:
Tan Hwee Ann in Melbourne at hatan@bloomberg.net;
Chia-Peck Wong in Singapore at cpwong@bloomberg.net
Last Updated: December 28, 2005 03:18 EST
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