Gold Rises for Second Day as Pause in Dollar Rally Spurs Buying
By Kim Kyoungwha
Dec. 24 (Bloomberg) -- Gold rose for a second day as the dollar extended its retreat from a three-month high against global currencies, buoying demand for the precious metal.
Bullion gained, climbing from a seven-week low earlier in the week, after a report showed sales of new homes in the U.S. unexpectedly fell last month. The metal has weakened 7.5 percent this month as the Dollar Index, a six-currency gauge of the greenback’s value, strengthened 4.1 percent.
“The movement in the dollar is still a key force dictating the course of prices,” said Steve Chun, a trader at Hyundai Futures Corp.’s overseas business team in Seoul. “New positions in the market are limited with some investors inclined to liquidate their holdings” before year-end holidays, he said.
Gold for immediate delivery increased as much as 1 percent to $1,098.15 an ounce and traded at $1,096.65 at 11:15 a.m. in Singapore. Gold for February delivery in New York rose 0.3 percent to $1,097.50 an ounce. The dollar traded at $1.4351 per euro in Tokyo from $1.4337 yesterday in New York. The Dollar Index slid 0.2 percent.
Gold has gained 24 percent this year as U.S. growth slumped during the longest recession since World War II, spurring demand for the precious metal as an investment haven. Gold holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, were unchanged at 1,132.71 metric tons yesterday, according to the company’s Web site.
Investors should avoid building new positions in a market thinned due to year-end holidays, said Jon Nadler, a senior analyst with Kitco Metals Inc.
“None of the moves in the metals in upcoming sessions are to be counted as significant in either direction,” Nadler wrote in a report yesterday. “The market cannot be expected to show discernable tendencies until the in-earnest resumption of trading activities.”
Among other precious metals, silver rose 0.7 percent to $17.225 an ounce, palladium jumped 1.4 percent to $363.50 and platinum gained 0.1 percent at $1,422.50 an ounce.
