FoundingFathers
07-19-2004, 01:04 AM
July 19 (Bloomberg) -- Gold may rise for the second week in three as a decline in the dollar and rising energy prices boost the appeal of precious metals as a hedge against declines in U.S. securities, a Bloomberg survey shows.
Twenty-six of 50 traders, investors and analysts polled in New York, London, Singapore, Beijing, Seoul and other cities on Thursday and Friday advised buying gold. Ten recommended selling, and 14 said they would hold the precious metal.
Gold rose 3.5 percent this month as the dollar dropped to a four-month low against the euro and oil jumped 11 percent to almost $42 a barrel. A drop in the U.S. currency makes dollar- priced metals cheaper in euros. High-cost energy is spurring inflation, which erodes the value of assets such as bonds.
``The two biggest factors affecting gold in the short-term are a weaker dollar and higher oil prices,'' said James Turk, managing director of Channel Islands-based Goldmoney.com, which stores about $24 million of gold for owners in 102 countries. ``We should be looking for higher gasoline prices, which in turn will further raise inflationary concerns.''
Gold for August delivery on Friday rose $2.40 to $406.80 an ounce on the Comex division of the New York Mercantile Exchange, reducing the loss for the week to $1.10, or 0.3 percent.
The dollar fell to a four-month low against the euro on Friday, and crude oil futures in New York rose to $41.90 a barrel, the highest since June 2.
A drop in the dollar and high oil prices may push gold to $413 an ounce this week, said Hans-Guenter Ritter, head of trading at Hanau, Germany-based Heraeus Holding GmbH, which specializes in processing precious metals for industrial use.
Financing Debt
International investor demand for U.S. government debt, stocks and other securities in May was the slowest since October, at a net $56.4 billion, the Treasury Department said on Friday. The dollar fell on the report, signaling the U.S. may have difficulty attracting enough capital to finance the nation's debts to holders overseas.
Gold ``remains in an upward trend,'' said Zhenwei Cai, a gold trader at Bank of China in Shanghai.
Consumer prices, led by a 36 percent surge in energy costs, climbed at an annual rate of 4.9 percent in the first six months this year, up from a 1.9 percent rise in 2003, the Labor Department in Washington said Friday.
Transportations costs, after rising 0.3 percent in 2003, surged at an annual rate of 13 percent in the first six months this year. Apparel prices rose at an annual rate of 2 percent through June after falling 2.1 percent last year.
Commodities on Rise
``I'm betting that gold, which is sensitive to inflation, will rise,'' said Yong Bum Bae, manager at HanMag Refco Futures Corp.'s trading center in Seoul. ``All commodities, such as oil, seem to be on the rise.''
Declines in the dollar are expected to continue this week, a separate Bloomberg survey showed. An index of the U.S. economy's likely performance over the next three to six months probably stalled in June, a report may show on Thursday.
The report ``could be a catalyst to weaken the dollar and create a more positive market focus on gold,'' said Frank Holmes, who manages $150 million in gold-related funds at U.S. Global Investors Inc. in San Antonio.
Hedge funds last week more than doubled their net holdings of gold futures on the Comex, a signal they expect prices to rise, a report from the U.S. Commodity Futures Trading Commission in Washington showed Friday.
Funds and other large speculators bought 70,434 more gold futures contracts than they had sold as of July 13, compared with a ``net long'' position of 31,403 contracts a week earlier, the commission said.
Twenty-six of 50 traders, investors and analysts polled in New York, London, Singapore, Beijing, Seoul and other cities on Thursday and Friday advised buying gold. Ten recommended selling, and 14 said they would hold the precious metal.
Gold rose 3.5 percent this month as the dollar dropped to a four-month low against the euro and oil jumped 11 percent to almost $42 a barrel. A drop in the U.S. currency makes dollar- priced metals cheaper in euros. High-cost energy is spurring inflation, which erodes the value of assets such as bonds.
``The two biggest factors affecting gold in the short-term are a weaker dollar and higher oil prices,'' said James Turk, managing director of Channel Islands-based Goldmoney.com, which stores about $24 million of gold for owners in 102 countries. ``We should be looking for higher gasoline prices, which in turn will further raise inflationary concerns.''
Gold for August delivery on Friday rose $2.40 to $406.80 an ounce on the Comex division of the New York Mercantile Exchange, reducing the loss for the week to $1.10, or 0.3 percent.
The dollar fell to a four-month low against the euro on Friday, and crude oil futures in New York rose to $41.90 a barrel, the highest since June 2.
A drop in the dollar and high oil prices may push gold to $413 an ounce this week, said Hans-Guenter Ritter, head of trading at Hanau, Germany-based Heraeus Holding GmbH, which specializes in processing precious metals for industrial use.
Financing Debt
International investor demand for U.S. government debt, stocks and other securities in May was the slowest since October, at a net $56.4 billion, the Treasury Department said on Friday. The dollar fell on the report, signaling the U.S. may have difficulty attracting enough capital to finance the nation's debts to holders overseas.
Gold ``remains in an upward trend,'' said Zhenwei Cai, a gold trader at Bank of China in Shanghai.
Consumer prices, led by a 36 percent surge in energy costs, climbed at an annual rate of 4.9 percent in the first six months this year, up from a 1.9 percent rise in 2003, the Labor Department in Washington said Friday.
Transportations costs, after rising 0.3 percent in 2003, surged at an annual rate of 13 percent in the first six months this year. Apparel prices rose at an annual rate of 2 percent through June after falling 2.1 percent last year.
Commodities on Rise
``I'm betting that gold, which is sensitive to inflation, will rise,'' said Yong Bum Bae, manager at HanMag Refco Futures Corp.'s trading center in Seoul. ``All commodities, such as oil, seem to be on the rise.''
Declines in the dollar are expected to continue this week, a separate Bloomberg survey showed. An index of the U.S. economy's likely performance over the next three to six months probably stalled in June, a report may show on Thursday.
The report ``could be a catalyst to weaken the dollar and create a more positive market focus on gold,'' said Frank Holmes, who manages $150 million in gold-related funds at U.S. Global Investors Inc. in San Antonio.
Hedge funds last week more than doubled their net holdings of gold futures on the Comex, a signal they expect prices to rise, a report from the U.S. Commodity Futures Trading Commission in Washington showed Friday.
Funds and other large speculators bought 70,434 more gold futures contracts than they had sold as of July 13, compared with a ``net long'' position of 31,403 contracts a week earlier, the commission said.