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Gold price trend depends on US dollar

10 June 2009 12:12 (UTC +04:00)

Bakuâ€“ APA-Economics. Gold gained for a second day as the dollar weakened and investor concern increased that inflation may accelerate, spurring demand for the precious metal as an alternative investment, Bloomberg reported.

The dollar, which typically moves inversely to bullion, may extend its losses against the euro as speculation that the global recession is ending reduces demand for the U.S. currency as a refuge. Other currencies gained against the dollar after oil reached a seven-month high and Asian equity futures gained

Gold for August delivery, the most-active contract on the Comex division of the New York Mercantile Exchange, gained as much as 0.7 percent to $961.30 an ounce, and traded at $959.90 at 1:47 p.m. The contract rose 0.2 percent yesterday.

Gold for immediate delivery gained 0.5 percent to $959.54 an ounce at 1:48 p.m. in Singapore, after rising 0.3 percent yesterday. The precious metal, which some investors buy to hedge against inflation, last traded at more than $1,000 an ounce on Feb. 20, and reached a record $1,032.70 on March 17, 2008.

The greenback remained under pressure on Wednesday as traders awaited the release of the Fed’s Beige Book on regional economic conditions and an auction of 10-year U.S. Treasury notes later in the day. The auction will be a key gauge of investor appetite for U.S. debt, Reuters reported.

Analysts said the trend of gold price will depend on the US dollar in the near term.