Gold in Asia Rises From Five-week Low After Crude Oil Rallies

By Feiwen Rong

July 31 (Bloomberg) -- Gold rose from a five-week low as a rally in crude oil boosted demand for the precious metal as a hedge against inflation.

Crude oil gained $4.58 yesterday to settle at $126.77 a barrel in New York, the highest close since July 22, as a U.S. Energy Department report showed gasoline inventories declined for the first time in five weeks. Gold has gained 9.3 percent this year while crude oil has advanced 32 percent.

Gold prices recovered somewhat from yesterday's losses as a late crude oil rally helped ``offset an initial dollar rise'', Darren Heathcote, head of trading at Investec Bank Ltd., said in a report today.

Bullion for immediate delivery gained as much as $5.90, or 0.7 percent, to $912 an ounce, and traded at $911.43 at 10:35 a.m. in Singapore. Gold dropped to $894.17 an ounce yesterday, the lowest since June 26. Silver for immediate delivery added 0.4 percent to $17.5525 an ounce at the same time.

Dollar-denominated gold fell yesterday because of a rally in the dollar which rose to the highest in a month against the euro after a report from ADP Employer Services showed companies unexpectedly added jobs this month.

The dollar traded at $1.5588 per euro at 10:40 a.m. in Singapore, after touching $1.5522 yesterday, the strongest since June 24.

Gold for June delivery on the Tokyo Commodity Exchange fell 16 yen to 3,192 yen a gram ($919 an ounce) at the 11 a.m. local time break.

Gold for December delivery on the Comex division of the New York Mercantile Exchange advanced $8.20, or 0.9 percent, to $920.50 an ounce in after-hours electronic trading.

Gold for December delivery on the Shanghai Futures Exchange was unchanged at 201.90 yuan a gram ($919 an ounce).

To contact the reporters on this story: Feiwen Rong in Singapore at Frong2@bloomberg.net