Gold Trades Near Highest in One Month as Crude Oil Increases

By Feiwen Rong

June 30 (Bloomberg) -- Gold traded near a one-month high in Asia as rising crude oil prices and a weaker dollar boosted the appeal of the precious metal as a hedge against inflation.

Crude oil rose for a third day and traded above $141 a barrel in New York on speculation further weakness in the dollar will sustain investor demand for the commodity. Gold gained 2.8 percent last week while crude oil soared 4.2 percent. The dollar traded near a three-week low against the euro today.

``Investors have been looking for a hedge against rising inflation, a weaker U.S. dollar and negative real interest rates after the Federal Reserve started cutting benchmark rates in mid- 2007,'' Tobias Merath, commodities analyst at Credit Suisse Group in Singapore, said in a report on June 27. ``Real assets such as commodities, and gold in particular, can provide such a hedge.''

Bullion for immediate delivery was little changed at $927.34 an ounce at 9:33 a.m. in Singapore, after reaching $931.05 an ounce on June 27, the highest in a month. Silver added 0.5 percent to $17.60 an ounce.

The dollar also traded near a three-week low against the yen before government data this week that may show U.S. employers cut jobs for a sixth consecutive month and U.S. manufacturing contracted at a faster pace this month.

Crude oil for August delivery advanced $1.51, or 1.1 percent, to $141.72 a barrel at 9:39 a.m. in Singapore. It rose to a record $142.99 on June 27.

To contact the reporter for this story: Feiwen Rong in Singapore at frong2@bloomberg.net