Gold Rises as Dollar Declines, Oil Tops $122; Silver Gains
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Gold Rises as Dollar Declines, Oil Tops $122; Silver Gains
by takeshitsai on Wed May 07, 2008 10:13 am
Gold rose for the third straight session as the dollar declined against the euro and energy costs surged, boosting the appeal of the precious metal as a hedge against inflation. Silver also gained.
The euro climbed as much as 0.6 percent against the U.S. currency, and crude oil jumped to $122.73 a barrel, the highest ever. Gold rallied 31 percent last year as soaring fuel prices and a weaker dollar sparked a 4.1 percent gain in consumer costs. The metal reached a record $1,033.90 an ounce on March 17, when the euro and crude set previous highs.
``Gold is on a piggyback ride on oil,'' said Matt Zeman, a metals trader at LaSalle Futures Group Inc. in Chicago. ``If oil keeps on making records, gold will grind higher.''
Gold futures for June delivery rose $3.60, or 0.4 percent, to $877.70 an ounce on the Comex division of the New York Mercantile Exchange. The metal has gained 3.1 percent in three sessions.
Silver futures for July delivery rose 3 cents, or 0.2 percent, to $16.86 an ounce. The price has climbed 25 percent in the past 12 months.
Oil jumped on Nigerian supply disruptions and heightening tensions between Turkey and Iraq. The dollar fell for the second straight day against the euro after gaining 2.5 percent in the previous two weeks.
``Gold will play with the dollar,'' said Marty McNeill, a trader at R.F. Lafferty Inc. in New York. ``If the dollar rallies, gold will fall and vice versa.''
`Summer Doldrums'
Still, gold has trailed the euro and oil since the March 17 peak. The metal is down 15 percent from its all-time high while the euro and oil have set records again.
``It's really a seasonal pattern, and gold goes into what's called the summer doldrums, or `sell in May and go away,''' Jon Nadler, an analyst at Kitco Minerals & Metals Inc. in Montreal, said in an interview on Bloomberg Radio. ``Barring a re- emergence of a second wave of the subprime debacle, I think gold might go to sleep a bit and trade in the range of $845 and probably $905.''
Investment in the StreetTracks Gold Trust, the biggest exchange-traded fund backed by bullion, has dropped 13 percent to 580.4 metric tons from a record 663.8 tons on March 17.
Hedge-fund managers and other large speculators reduced net-long position in Comex futures in the week ended April 29, U.S. Commodity Futures Trading Commission data showed on May 2.
Speculative long positions, or bets prices will rise, outnumbered short positions by 160,648 contracts, the agency said in its Commitments of Traders report. Net-long positions fell by 6,975 contracts, or 4.2 percent, from a week earlier.
The euro climbed as much as 0.6 percent against the U.S. currency, and crude oil jumped to $122.73 a barrel, the highest ever. Gold rallied 31 percent last year as soaring fuel prices and a weaker dollar sparked a 4.1 percent gain in consumer costs. The metal reached a record $1,033.90 an ounce on March 17, when the euro and crude set previous highs.
``Gold is on a piggyback ride on oil,'' said Matt Zeman, a metals trader at LaSalle Futures Group Inc. in Chicago. ``If oil keeps on making records, gold will grind higher.''
Gold futures for June delivery rose $3.60, or 0.4 percent, to $877.70 an ounce on the Comex division of the New York Mercantile Exchange. The metal has gained 3.1 percent in three sessions.
Silver futures for July delivery rose 3 cents, or 0.2 percent, to $16.86 an ounce. The price has climbed 25 percent in the past 12 months.
Oil jumped on Nigerian supply disruptions and heightening tensions between Turkey and Iraq. The dollar fell for the second straight day against the euro after gaining 2.5 percent in the previous two weeks.
``Gold will play with the dollar,'' said Marty McNeill, a trader at R.F. Lafferty Inc. in New York. ``If the dollar rallies, gold will fall and vice versa.''
`Summer Doldrums'
Still, gold has trailed the euro and oil since the March 17 peak. The metal is down 15 percent from its all-time high while the euro and oil have set records again.
``It's really a seasonal pattern, and gold goes into what's called the summer doldrums, or `sell in May and go away,''' Jon Nadler, an analyst at Kitco Minerals & Metals Inc. in Montreal, said in an interview on Bloomberg Radio. ``Barring a re- emergence of a second wave of the subprime debacle, I think gold might go to sleep a bit and trade in the range of $845 and probably $905.''
Investment in the StreetTracks Gold Trust, the biggest exchange-traded fund backed by bullion, has dropped 13 percent to 580.4 metric tons from a record 663.8 tons on March 17.
Hedge-fund managers and other large speculators reduced net-long position in Comex futures in the week ended April 29, U.S. Commodity Futures Trading Commission data showed on May 2.
Speculative long positions, or bets prices will rise, outnumbered short positions by 160,648 contracts, the agency said in its Commitments of Traders report. Net-long positions fell by 6,975 contracts, or 4.2 percent, from a week earlier.
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