Gold, platinum up as weak dollar boosts demand

New York: Gold rose, capping its first weekly gain in a month, as a declining dollar boosted demand from investors seeking an alternative.

Platinum and palladium also gained, while silver fell.

The dollar lost 1.1 per cent against the euro on Friday, heading for a second weekly decline, as US unemployment climbed last month to the highest rate since 1994, indicating the financial crisis is taking its toll.

Gold generally moves in the opposite direction of the US currency.

"Gold came up on the euro strength," said Frank McGhee, head metals dealer at Integrated Brokerage Services in Chicago. Gold will be 'bullish' in the long term as inflation picks up, he said.

Gold futures for December delivery rose $2, or 0.3 per cent, to $734.20 an ounce on the Comex division of the New York Mercantile Exchange on Friday.

The price advanced 2.2 per cent for the week, the first gain for a most-active contract since the five days ended October 10.

The dollar dropped 0.2 per cent to trade at $1.2746 per euro, after earlier touching $1.285. The 15-nation European currency was headed for a second straight weekly gain against the dollar after rising 0.8 per cent the previous week.

Trust

"Gold will go up, because it is the only money you can trust," Michael Martin, a trader at R.F. Lafferty Inc. in New York, said on Friday in an e-mailed note.

Gold reached a record $1,033.90 an ounce in March as the euro headed for an all-time high against the dollar in July.

Silver futures for December delivery fell 9.2 cents, or 0.9 per cent, to $9.963 an ounce on the Comex. That leaves the metal up 2.4 per cent for the week.

Silver will outperform gold as a hedge against inflation, investor Jim Rogers said on November 3. Silver is down 33 per cent this year, while gold has fallen 12 per cent.

"It's been beaten down horribly," said Rogers, the chairman of Singapore-based Rogers Holdings. "If you put a gun to my head and said you have to buy one, I would buy silver rather than gold." Silver futures may "spike higher" to $22 an ounce in the next six months, Carlos Sanchez, associate director of research at CPM Group, said.

Anglo Platinum Ltd., the world's biggest producer of the metal, said it is still supplying customers from its Polokwane smelter in South Africa after an accident on November 5.

The company said the incident at the plant, 322 kilometres north of Johannesburg, may cut output by 200,000 ounces this year.

Platinum futures for January delivery rose $13.70, or 1.6 per cent, to $852 an ounce on the Nymex. December palladium was up $1.40, or 0.6 per cent, to $224 an ounce in New York.