Gold Gains in New York, London as Weaker Dollar Spurs Demand
NEW YORK
(Feb 9) Gold gained in New York and London as a weaker dollar increased demand for bullion as an alternative investment. Other precious metals rose.
The U.S. Dollar Index, a six-currency gauge of the greenback’s strength, fell as much as 0.5 percent on speculation European officials will agree to help Greece tackle its budget gap. Gold typically moves inversely to the U.S. currency, which climbed for a third week last week as concern over the Greek deficit weighed on the euro. China’s sovereign wealth fund took a $155.6 million stake in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion.
“The stronger euro tone has prompted some bids” in gold, James Moore, an analyst at London-based TheBullionDesk.com, said in a report. Still, the metal “remains vulnerable to further liquidation should European Union officials not agree to assist Greece.”
Gold futures for April delivery rose $8.50, or 0.8 percent, to $1,074.70 an ounce on the New York Mercantile Exchange’s Comex unit at 10:29 a.m. local time. Gold for immediate delivery in London was 1.1 percent higher at $1,074.20.
The metal increased to $1,071.25 an ounce in the afternoon “fixing” in London, used by some mining companies to sell production, from $1,068 at the morning fixing.
Leaders Meet
EU leaders are scheduled to meet on Feb. 11 to discuss the economic outlook, a summit that may be overshadowed by Greece’s budget woes. European finance officials are for now sticking to their line that Greece, which has a deficit of 12.7 percent of gross domestic product, won’t need outside help. Greek shares gained today after four days of declines.
“With European woes easing somewhat, the dollar is retreating and demand for investment assets including gold is coming back,” said Hwang Il Doo, a senior trader with KEB Futures Co. in Seoul. “There are some investors seeking bargains, but the strength in gold appears temporary for now.”
China Investment Corp. bought 1.45 million SPDR Gold Trust shares, or 0.4 percent of the total, and became the fourth- largest holder in the U.S. Oil Fund, according to a Securities and Exchange Commission 13-F filing posted on Feb. 5. The $300 billion sovereign wealth fund pumped about $10 billion into commodity-related concerns in the second half of 2009.
