Gold, Silver Futures Advance as Dollar Weakens Against Euro
By Pham-Duy Nguyen
July 6 (Bloomberg) --
Gold and silver rose in New York after a decline in the value
of the dollar boosted the appeal of precious metals as
alternative investments.
Gold generally moves in the opposite direction of the U.S.
dollar, which fell against the euro even after a report
showed more jobs were created last month than forecast.
Before today, gold had gained 2 percent this year while
the dollar had dropped 3 percent against the euro.
``Gold's inverse relationship to the dollar is very strong,'
said Frank Lesh, trader at FuturePath Trading LLC in Chicago.
Gold futures for August delivery rose $6.40, or 1 percent,
to $657 an ounce at 11:35 a.m. on the Comex division of
the New York Mercantile Exchange.
The metal is up 0.9 percent for the week.
Silver futures for September delivery rose 24 cents,
or 1.9 percent, to $12.82 an ounce on the Comex.
Before today, the price had declined 2.7 percent this year.
Silver was up 2.9 percent for the week.
Employers added 132,000 workers to payrolls last month, the U.S. Labor Department said. Economists projected employment would rise by 125,000, according to the median of forecasts in a Bloomberg survey. The increase followed a 190,000 gain in May that was larger than previously reported.
Gold also gained on higher oil prices. Some investors buy precious metals when energy costs rise to guard against inflation. Oil futures rose as much as 1.6 percent today to $72.94 a barrel, heading for fourth straight weekly gain.
Gold, Crude Links
The price of gold has more than doubled in the past six years as the price of crude has almost quadrupled, reaching a record $78.40 a barrel last July.
``We remain positive on gold based on a mix of supply and demand and macro and monetary catalysts,' John Hill, an analyst at Citigroup in San Francisco, said today in a note to investors. ``The drivers that have lifted gold by $50 to $150 an ounce per year remain firmly in place and we expect gold to work much, much higher over time in what has to be one of the simplest, most obvious calls in the capital markets.'
Gold will average $700 in the second half of this year and $750 in 2008, Hill said.
Still, some investors remain sidelined.
``Gold should be doing better in the face of the weak dollar
and $72 oil,' William O'Neill, a partner at Logic Advisors
in Upper Saddle River, New Jersey, said in a report today.
``It seems that many analysts like gold long term, but
the near term action continues lackluster.'
A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.
To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net .
Last Updated: July 6, 2007 12:00 EDT
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