Gold Climbs in Asia After Touching 14-Week Low on Strong Dollar

By Jae Hur

Aug. 11 (Bloomberg) -- Gold climbed for the first time in three days, after dipping to a 14-week low last week as the euro slumped against the dollar, eroding the appeal of the precious metal as an alternative investment. Silver also gained.

Gold's 14-day relative strength index, a gauge of momentum, was below 30 on Aug. 8, signaling prices may rise. Bullion lost 6 percent last week, the biggest such drop since March 21. The loss was the fourth straight weekly decline, the longest slide since June 2006.

``The dollar's move is the key factor for gold as well as other commodities,'' Tatsuo Kageyama, an analyst at Kanetsu Asset Management Co. in Tokyo, said today by phone. ``The market may want to see when and where physical demand will pick up.''

Bullion for immediate delivery rose as much as $7.88, or 0.9 percent, to $864.48 an ounce and traded at $862.55 as of 1:18 p.m. in Singapore. The price touched $851.37 on Aug. 8, the lowest since May 2. Silver for immediate delivery was up 0.6 percent at $15.405 an ounce.

The euro lost 3.6 percent last week, the fourth weekly loss, and slumped to a five-month low of $1.4907 today after an armed conflict between Russia and Georgia spread to a second region. The currency last traded at $1.4986.

Crude oil for September delivery rose as much as $1.54, or 1.3 percent, to $116.74 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It last traded at $116.30.

Gold for December delivery gained 0.4 percent to $868.60 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.

Gold for June delivery on the Tokyo Commodity Exchange was up 2 yen at 3,073 yen a gram ($868 an ounce) as of 2:38 p.m. local time after trading between 3,053 and 3,080 yen.

To contact the reporter on this story: Jae Hur in Singapore at jhur1@bloomberg.net