Gold Heads for Second Weekly Gain as Oil Surges, Dollar Falls
By Feiwen Rong
June 27 (Bloomberg) -- Gold headed for a second weekly gain after oil topped $140 a barrel yesterday and the dollar declined against the euro, boosting the appeal of the precious metal as a hedge against inflation and as an alternative asset.
The dollar fell for the third day yesterday as expectations for a U.S. interest rate hike receded after comments from the Federal Reserve on Wednesday. Crude oil for August delivery surged more than $5 to a record $140.39 a barrel yesterday after news that Libya was considering a production cut.
Gold rallied more than $30 yesterday to a one-month high of $918.09 an ounce ``in response to a tumbling stock market, oil prices surging to a new record high and funds pouring into commodities,'' Darren Heathcote, head of trading at Investec Bank Ltd., said in a report today.
Bullion for immediate delivery was down 0.5 percent to $912.92 an ounce at 9:46 a.m. in Singapore. Silver added 0.3 percent to $17.22 an ounce at the same time.
The dollar declined to the weakest level against the euro in more than two weeks as the Fed left the target lending rate at 2 percent and said in a statement at the end of its two-day meeting that ``uncertainty'' about the inflation outlook remains high.
The dollar traded at $1.5739 per euro at 9:49 a.m. in Singapore, from $1.5757 yesterday when it touched $1.5767, the weakest since June 9.
Crude oil traded at $139.15 a barrel at 9:50 a.m. in Singapore.
``Oil prices at current levels should support precious metal investment interest following the Fed's decision to hold rates,'' Manqoba Madinane, analyst at Standard Bank in Johannesburg, said in a report yesterday.
To contact the reporter for this story: Feiwen Rong in Singapore at frong2@bloomberg.net
Last Updated: June 26, 2008 22:11 EDT
