Middle-east Arab News Opinion | Asharq Al-awsat

Gold Rises 1 Pct on Record High Oil, Weaker Dollar - ASHARQ AL-AWSAT English Archive
Select Page

LONDON, (Reuters) – Gold gained more than 1 percent on Tuesday as record high oil prices and a weaker dollar encouraged investors to put money into precious metals.

The metal, seen as a hedge against oil-led inflation and an alternative investment to the U.S. currency, climbed to a high of $935.65 an ounce and was quoted at $932.90/933.90 at 1001 GMT, against $925.30/926.10 late in New York on Monday.

“Gold has gained on the back of a weaker dollar. We are now seeing some acceleration in the buying interest on expectations that gold could shift higher from here,” said Frederic Panizzutti, metals analyst at MKS Finance.

“We expect the next target to be around $950. Still, it might take a bit of time to reach that level. The market remains shy after the recent price correction,” he added.

Gold slipped to a two-month low of $872.90 an ounce in early April after hitting a record high of $1,030.80 on March 17 in a broad commodities sell-off, triggered by a rise in the dollar and some weakness in oil prices.

Oil advanced to all-time peaks on Tuesday, as investors sought to hedge against a battered dollar. It is up 17 percent from the start of the year and is averaging near $100 a barrel.

The bullion market was getting support from the dollar, which held within half a cent of record lows versus the euro in generally cautious trading ahead of U.S. economic data and first-quarter results from corporate heavyweights this week.

The dollar has come under pressure due to a sluggish U.S. economy — which some think is already in recession — and 3 percentage points in rate cuts since September. The U.S. Federal Reserve is expected to cut the rate again later this month from the current 2.25 percent.

A weaker dollar makes gold cheaper for holders of other currencies and often lifts bullion demand.

“Pressure on the greenback this morning has lifted gold and given the likelihood for further dollar downside movements and gains in the energy sector, we could well see gold make a move higher in the coming sessions,” said James Moore, analyst at TheBullionDesk.com.

“Gold still has to overcome strong technical resistance but given the ongoing recessionary/inflationary fears and liquidity issues dogging the credit market, we remain bullish in the mid- to longer-term and expect gold to reclaim $1,000 later in the year,” he said in a market report.

Investors awaited U.S. producer price index for March, due later on Tuesday, and the U.S. March consumer price index on Wednesday for the dollar’s direction, which may affect gold.

The market will also scrutinise results from Merrill Lynch and Citigroup, due later in the week. Analysts expect both to announce billions of dollars in bad debt write-downs.

In the physical sector, purchases from India, the world’s largest gold consumer, kept the physical market alive during the wedding season, but wild swings in bullion prices crimped demand in other parts of Asia.

In other markets, U.S. gold futures for June delivery rose $5.80 an ounce to $934.60 an ounce in electronic trading.

Spot platinum rose to a high of $2,000 an ounce and was last quoted at $1,990/2,000, against $1,958/1,968 in New York. Silver was up 3 cents at $17.81/17.86 an ounce, but palladium fell $1 to $458/463 an ounce.

Asharq Al-Awsat

Asharq Al-Awsat

Asharq Al-Awsat is the world’s premier pan-Arab daily newspaper, printed simultaneously each day on four continents in 14 cities. Launched in London in 1978, Asharq Al-Awsat has established itself as the decisive publication on pan-Arab and international affairs, offering its readers in-depth analysis and exclusive editorials, as well as the most comprehensive coverage of the entire Arab world.

More Posts

Follow Me:
FacebookGoogle PlusYouTube