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Gold surges as dollar slips

(China Daily/Agencies)
Updated: 2009-10-14 08:07

Gold, little changed in Asia, may rise to a record as signs of a recovery in the global economy weaken the dollar, boosting demand for the metal as a store of value and inflation hedge. Palladium rose to a 14-month high.

Bullion, which usually moves inversely to the dollar, is on course for a ninth annual gain after the dollar dropped 6.3 percent this year against a basket of six currencies. Asian stocks rose on Tuesday after the Standard & Poor's 500 Index (S&P 500) reached a one-year high on speculation corporate profits will improve.

"The main driver is still the US dollar, which continues to show weakness, and we see gold testing higher again," said Darren Heathcote, head of trading at Investec Bank Ltd in Sydney. "As we start to see more evidence of economic recovery, we might see the momentum catalyst push gold higher."

Related readings:  Stock woes trigger a new gold rush among private investors  Gold prices leap on weak dollar  Gold heats up, metal climbs to $1,058/ounce  New futures trading accounts to run on real-name basis

Gold for immediate delivery traded at $1,055.45 an ounce at 2:54 pm in Singapore compared to the all-time high of $1,061.55, set on October 8, and Tuesday's low of $1,051.30. The Dollar Index was little changed at 76.2.

The S&P 500 climbed for a sixth day, its longest streak since June 2007. Among stocks that advanced, Ford Motor Co surged as the carmaker said sales in Europe increased 12 percent in September. Oil futures gained as much as 2.9 percent on Monday, and traded at $73.02 a barrel in New York Tuesday.

"Whether it's oil, gold or stocks, the weaker dollar is helping to inflate asset prices and it's giving the market nominal gains," Peter Boockvar, equity strategist at Miller Tabak & Co in New York, said.

Gold holdings in the SPDR Gold Trust, the biggest exchange traded fund backed by bullion, were unchanged at 1,109.31 tons as of October 12, according to the company's website.

Among other precious metals, palladium jumped 1.5 percent to $334 an ounce, the highest since August 11, 2008. Silver rose 0.5 percent to $17.795 an ounce and platinum added 0.3 percent to $1,345.50 an ounce.