Gold Heads for Second Weekly Gain on Demand for Inflation Hedge

By Rachel Graham

June 27 (Bloomberg) -- Gold headed for a second weekly gain as crude oil rose to a record and the dollar weakened, boosting the appeal of the metal as a hedge against inflation and an alternative investment to the U.S. currency.

Crude traded at a record $141.71 a barrel today, adding to expectations inflation will quicken. The dollar has weakened against the euro for two weeks, extending losses after the U.S. Federal Reserve on June 25 gave no indication at its policy meeting that it would resume interest-rate increases.

``Inflation fears, dollar weakness, that's what has pushed gold higher,'' Peter Fertig, a consultant for Dresdner Kleinwort, said by phone from Hainburg in Germany.

Gold for immediate delivery rose $2.01, or 0.2 percent, to $919.31 an ounce as of 9:08 a.m. in London. Gold futures rose $6.40, or 0.7 percent, to $921.50 an ounce in electronic trading on the Comex division of the New York Mercantile Exchange.

Among other metals for immediate delivery, silver rose 20.49 cents, or 1.2 percent, to $17.37 an ounce. Platinum added $12.50, or 0.6 percent, to $2,077.50 an ounce and palladium rose $3, or 0.6 percent, to $471.50 an ounce.

To contact the reporter on this story: Rachel Graham in London at rgraham13@bloomberg.net
Last Updated: June 27, 2008 04:14 EDT