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Gold climbs to three-month high on weaker dollar
Gold climbed to its highest value in more than three months in London as a weaker dollar increased demand for the metal as an alternative investment.
The US Dollar Index dropped as much as 0.8 percent Monday to the lowest level since December 18, after posting its biggest monthly loss this year in May. Gold, which typically moves inversely to the US currency, added 10 percent last month, the most since November, and silver surged 27 percent, the most since 1987.
“Most of the ongoing rally in the precious metal is more driven by a stark weakness in the US dollar than the risk averse buying we saw last winter,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said Monday. “Inflation concerns are gradually creeping onto the investor agenda.”
Bullion for immediate delivery rose as much as US$9.79, or 1 percent, to $988.94 an ounce, the highest since February 24. It traded at $987.25 by 11:04 a.m. in London. August futures added $8.10, or 0.8 percent, to $988.40 on the New York Mercantile Exchange’s Comex division.
Gold rose to $987 in the morning “fixing” in London, used by some mining companies to sell production, from $975 at the afternoon fixing on May 29.
Spot prices traded above $1,000 in London on February 20, the first time the metal had breached that price since March 2008, when it climbed to a record $1,032.70. Gold is up 12 percent this year.
In Vietnam, gold reached a fresh all-time high over the international hike.
At the Saigon Jewelry Joint Stock Co., Vietnam’s biggest gold trader, the precious metal was traded at VND21.65 million per tael, or $1014.89 an ounce.
Trading is very quiet as gold price is sky-high, so Vietnam’s gold tracks international moves, said Huynh Trung Khanh, a Vietnamese consultant of the World Gold Council.
Quantitative easing
Bullion “seems set to challenge” the February high “as investors seek to offset inflation fears as a result of the massive quantitative easing programs recently undertaken,” James Moore, an analyst at TheBullionDesk.com in London, said Monday.
The MSCI World Index of shares rose to the highest level in almost seven months as China’s manufacturing expanded for a third month and the country increased fuel prices. The index has gained 43 percent since March 9 on optimism that the $12.8 trillion pledged by the US government and the Federal Reserve will help end the first global recession since World War II.
“Following an improved optimism on a global scale, funds are now buying commodities across the board,” London-based broker ODL Securities Ltd. said Monday in a report.
Investment in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, was unchanged at 1,118.76 metric tons on May 29, the company’s website showed.
thanhnien, bloomberg
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