Business | Markets
Gold rebounds on slight drop in dollar
Gold prices climbed yesterday as investors took advantage of a slight fall in the dollar to snap up the metal, but weaker oil prices capped gains. Investors awaited US economic data that is likely to affect the dollar and, in turn, precious metals.
- Reuters
- Published: 23:32 June 2, 2008
London: Gold prices climbed yesterday as investors took advantage of a slight fall in the dollar to snap up the metal, but weaker oil prices capped gains. Investors awaited US economic data that is likely to affect the dollar and, in turn, precious metals.
Spot gold rose as high as $893.80 an ounce and was quoted at $892.00/$892.50 at 0956 GMT, against $885.95/$887.55 in New York late on Friday, when the metal closed one per cent higher after touching a two-week low.
"As we approach the summer season, gold appears to be trading within contracting ranges and we could look forward to a repeat of last week's choppy sideways action," said David Holmes, director of precious metals sales at Dresdner Kleinwort.
"Despite a pattern of lower highs and lower lows since March, the bullish story remains intact," he said, adding an absence of follow-through selling in Asia prompted investors to buy the metal.
Analysts said bullion investors would continue to track the dollar for short-term direction. The US currency slipped after trading 0.2 per cent higher against the euro, having struck a two-week high on Friday.
Bullion demand
A weaker dollar makes gold cheaper for holders of other currencies and often lifts bullion demand. The metal is also generally seen as a hedge against oil-led inflation. Oil fell more than $1 to around $126 a barrel, as traders shrugged off tropical storm Arthur, which marked the start of the Atlantic hurricane season by shutting two Mexican oil ports.
"Economic data from the US will again have a bearing on market direction this week," James Moore, precious metals analyst at theBullionDesk.com said in a market report.
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