Gold touches 5-mth high

Gold rose to a five-month high after London's biggest gold fund increased its holdings, signalling private investors are accelerating purchases.

Holdings in the Lyxor Gold Bullion Securities fund increased to $1.81 billion yesterday, the highest since December 14. The metal advanced 1.5 percent in the past two days as the dollar weakened against the euro and crude oil climbed, renewing speculation about inflation.

"The general trend in oil and the dollar is supporting gold, driven by demand from investors and speculators,'' said Wolfgang Wrzesniok-Rossbach, head of sales and marketing in Hanau, Germany for Heraeus Holding GmbH, owner of five precious-metals refineries. "Technically, gold is in a nice uptrend.''

Gold for immediate delivery gained $5.05, or 0.8 per cent, to $658.25 an ounce at 12:53 p.m. in London, the highest since July 17.

As long as gold stays above $640, ``the short and medium-term trends remain positive,'' London-based Barclays Capital said in its technical strategy report yesterday. A close above $657 would signal gold is heading for the high in July, the report said. Gold in July went as high as $676.53.

Investment demand in Lyxor Gold Bullion has gained about $70 million this year, according to the Web site of Exchange Traded Gold, a World Gold Council unit that tracks investment demand for bullion funds. Gold in the fund had declined to a two-month low of 1.66 million ounces on Jan. 8.

Silver rose 8 cents to $13.605 an ounce today, palladium gained $2 to $340.50 an ounce and platinum advanced $4 to $1,184 an ounce.