BackGold climbs as dollar surrenders early gains
Gold climbs as dollar surrenders early gains
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London: Gold rose on Monday, building on the gains of the last two weeks, as the euro rose towards $1.50 and oil prices reached a new 12-month high near $80 (Rs3,704) a barrel.
The precious metal could be set to target new record highs above the peak of $1,070.40 an ounce it set last week if the dollar continues to weaken against the euro, boosting interest in the metal as an alternative asset, dealers said.
Spot gold was bid at $1,054.80 an ounce at 10.57 GMT against $1,050.80 late in New York on Friday. US gold futures for December delivery on the COMEX division of the New York Mercantile Exchange rose $4.80 to $1,056.30 an ounce.
“(Gold) held the $1,040 level rather well," said Afshin Nabavi, head of trading at MKS Finance, adding the metal had been supported by light physical demand from the Far East. “If the dollar continues weakening, we ought to see a test of $1,072," he said.
The euro rose back towards 14-month highs against the dollar on Monday, while the dollar index, which tracks the US unit’s performance against a basket of six other currencies, gave up early gains to decline 0.14%.
Dollar weakness, which makes gold cheaper for non-US investors, was identified by analysts as the primary driver behind gold’s rally to record highs last week.
“The dollar remains vulnerable, and investor appetite for gold could re-emerge very quickly," said Andrey Kryuchenkov, an analyst at VTB Capital, in a note.
Strength in bellwether commodity crude oil is also lifting interest in gold as a hedge against oil-led inflation, and in commodities as an asset class, analysts said. Oil prices rose above $79 a barrel on Monday, marking their eighth straight session of gains. US earnings could be a key driver of oil prices this week, as investors try to gauge the strength of the global economic recovery.
European shares rose in early trade, boosted by a rise in banking stocks and a firmer tone to commodities. The equity markets are also awaiting fresh direction from corporate earnings, with results due from US heavyweights Apple Inc. and Texas Instruments.
Some have speculated that a decline in stock markets linked to poor third-quarter earnings could give some respite to the beleaguered dollar, consequently weighing on gold.
Physical demand for the metal was lacklustre on Monday, with holdings of the largest gold exchange-traded fund, SPDR Gold Trust, flat for a seventh session on Friday.
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