Gold rises as American home sales plummet
Pham-Duy Nguyen and Julie Tay
2006-03-27
GOLD rose the most in a month after the US dollar fell against the euro on Friday, boosting the precious metal's appeal as an alternative investment.
Gold erased losses last week after US home sales in February dropped by the most in almost nine years last month. That eased concern the US Federal Reserve will keep increasing interest rates, sending the dollar lower. Gold outperformed US stocks and bonds last year.
"You can give some credit to the home sales numbers, which strengthened the euro and is supportive for gold," said Michael Guido, director of hedge fund marketing and commodity strategy for Societe Generale SA in New York.
Gold futures for April delivery rose US$9.70 or 1.8 percent to US$560.50 an ounce on the Comex division of the New York Mercantile Exchange, the biggest percentage gain since February 24.
The metal gained 1 percent last week after climbing 2.6 percent the previous week. A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.
US home sales fell 10.5 percent to an annual rate of 1.08 million, the lowest since May 2003, from a revised 1.207 million in January, the Commerce Department said. The dollar gained against the euro in the past four days.
Price support
Gold sold in dollars moved in tandem with the euro in the three years ended 2004. That relationship changed last year when gold gained in all major currencies, paced by a 36 percent gain in yen and euros.
Some analysts expect gold to advance even if the dollar climbs against those currencies. The dollar rose 14 percent last year against the euro.
Gold also gained after price charts showed so-called technical support around US$550.
"We couldn't draw any new sellers below US$550," Guido said. Gold may reach US$570 early this week, he said.
Gold had a pivot point at US$549.03, according to Bloomberg data. Pivot points identify areas of potential support for a falling market and resistance in a rising market, based on the previous day's high, low and closing prices.
"We held a trend line that brought in some new buying," said Frank Lesh of Rand Financial Services Inc in Chicago.
Bloomberg
shanghaidaily.com
AZK / MNG /
CMM.V / IPT.V / MUG.V
PRZFF.PK ( PRZ.V ) / BDRGF.PK ( BGL.V )
YZCCF.PK ( YZC.v ) |
