Gold above $1,050, weaker dollar supports

Gold above $1,050, weaker dollar supports

London: Gold rose above $1,050 an ounce on Monday, wiping out most of the previous week’s losses, as dollar weakness made bullion cheaper for holders of other currencies.

Spot gold rose to $1,052 an ounce at 4:32pm, compared with New York’s notional close of $1,044.40, erasing its 1% loss from the week before.

Last week gold registered its first weekly loss since the week of 25 September, after dollar weakness had helped spur four consecutive weeks of gains.

The dollar drifted lower against a basket of major currencies. The euro bid at $1.4765.

“For the next 6 months were going to see quite a bit more dollar weakness," Standard Bank analyst Walter De Wet said.

“On a relative basis the US interest rates remain very low. Also, the Fed has been a lot more aggressive on quantitative easing than any other central bank, which is not good for dollar strength."

US gold futures for December delivery stood at $1,052.5 an ounce, up about 1 percent from Friday when the contract fell $6.70 to $1,040.40 on the COMEX division of the New York Mercantile Exchange.

Among data due on Monday, investors will eye US ISM and pending homes sales data, both due at 6:30pm.

“We need...a weaker dollar then gold can rebound to $1,050 during course of week," said Tobias Merath, an analyst at Credit Suisse.

“Over the last weeks we’ve seen a bit of a correction in gold - driven by dollar strength."

AngloGold Ashanti, the world’s No.3 gold producer, lowered its annual production target for the second straight quarter after suspending output at a South African mine for safety checks.

AngloGold and Ranggold said on Saturday they had entered into an agreement with Congo’s state owned OKIMO to buy a stake in Moto Goldmines for $113.6 million.

The world’ largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings fell 0.915 tonnes on Friday, making the total weekly decline to 4.575 tonnes.

But Standard Bank’s Walter de Wet said that physical buying was supporting prices.

“On the downside it seems well-protected," he said.

“We’re seeing good physical buying. When gold goes below $1,040 there’s some good interest which is supporting the gold price."

Silver traded at $16.50 from $16.27. Platinum was at $1,329 from $1,322.5 and palladium was at $322.50 from $318.5.