Gold rose for a second day, set for a monthly gain, as the dollar declined against major currencies, boosting the metal’s appeal as an alternative investment.
Bullion has advanced this month as the dollar has weakened against the euro as better-than-estimated results from companies including Sony Corp and Motorola helped drive US and Japanese stock gauges to the highest this year. Gold tends to rise as the dollar weakens.
“Gold’s moves are pretty much driven by the dollar,” said Hwang Il Doo, a trader with KEB Futures in Seoul. “A pull back from $950 is also triggering some buying of the metal.”
Gold for immediate delivery rose 0.4 percent to $938.07 an ounce Singapore. The metal is up 1.3 percent this month, taking this year’s gain to 6.4 percent. Gold touched a two-week low of $925.90 on July 29. The dollar fell 0.3 percent against a basket of six major currencies and was trading at $1.4128 against the euro compared with $1.4075.
Gold may find it difficult to break through $1,000 an ounce this year, ANZ Banking
Corp. said. “At this stage, the current environment suggests it will struggle to push through the $1,000 level,” Mark Pervan, senior commodity strategist at ANZ, said in an interview with Bloomberg Television. “The dollar’s strength in the near term creates volatility in gold, but in 2010 we should see a weaker dollar and higher gold prices.”
Gold redemptions
Gold may drop next week, heading for the “summer doldrum lows” in the Northern Hemisphere, after investors sold more metal, a survey showed. Thirteen of 22 traders, investors and analysts polled by Bloomberg News, or 59 percent, said bullion would fall next week. Six forecast higher prices and three were neutral.
Redemptions of gold exchange-traded products in July are set to be the second largest since inception of the first physical gold product in 2003, according to a report from Barclays Capital. Holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, stood at 1,072.87 tons as of July 30, according to figures on the company’s Web site.
“Prices have been at the mercy of currency and equity market movements in recent sessions,” Galye Berry and other analysts with Barclays Capital, wrote in a note. “Speculative investors remain positive and we still expect physical demand to emerge upon price dips around $900.”
The author is a Bloomberg News columnist. The opinions expressed are his own
