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Gold rises in London as two-day drop, weaker dollar spur demand
Gold gained in London, extending its third quarterly increase, as some investors bought bullion after a two-day decline and as a weaker dollar increased the metal’s appeal as an alternative investment.
Gold slipped 1.2 percent on Tuesday, the biggest drop in more than a week, which cut its quarterly gain to 0.8 percent as an unexpected drop in US consumer sentiment spurred demand for the dollar. The US Dollar Index, a six-currency measure of the greenback’s value, fell as much as 0.2 percent Wednesday.
“If it falls to US$925 an ounce, it certainly looks cheap,” said Wolfgang Wrzesniok-Rossbach, head of marketing and sales at Hanau, Germany-based Heraeus Metallhandels GmbH. “There’s a bit of bargain hunting. The overall picture hasn’t changed, there’s still enough threat around the global economy that should be positive for gold.”
Bullion for immediate delivery rose as much as $5.74, or 0.6 percent, to $932.34 an ounce and traded at $930.88 at 9:18 a.m. in London. August gold futures added 0.3 percent to $930.50 an ounce on the New York Mercantile Exchange’s Comex division.
In Vietnam Wednesday, gold was traded VND130,000 lower at VND20.88 million per tael, or $977.53 an ounce, at the Saigon Jewelry Joint Stock Co., the country’s largest gold trader.
“Gold has edged slightly higher this morning on the back of the dollar and for the moment appears comfortable in the current broad $925-50 range,” James Moore, an analyst at TheBullionDesk.com in London, wrote in a note Wednesday.
Bullion typically moves inversely to the US currency. The dollar index slipped 6.2 percent last quarter, the first decline in more than a year.
Investment in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, dropped 5.2 metric tons to 1,120.55 tons on Tuesday, the company’s website showed.
“The decline in the exchange-traded gold is the first signal of the overall weakness in bullion,” Pradeep Unni, a Richcomm Global Services analyst in Dubai, said in a note. “Investors are slowly and steadily shifting their investments into high-yielding assets like currencies and equities.”
thanhnien, bloomberg
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