By Feiwen Rong
Aug. 29 (Bloomberg) -- Gold headed for the second weekly gain after oil rose and the dollar retreated against the euro, boosting the appeal of the precious metal as an inflation hedge.
Bullion added 1.3 percent this week before today while crude oil advanced 0.9 percent. The dollar fell on speculation a U.S. government report will show growth in personal spending slowed as home prices fell and fuel costs increased. Gold benefits from a drop in the U.S. currency as it is denominated in dollars.
``Gold rebounded from an overnight low'' on the oil and currency markets, Peter Tse, chief precious metals trader at Scotia Mocatta, the bullion arm of the Bank of Nova Scotia, said today by phone from Hong Kong.
Bullion for immediate delivery gained 0.3 percent to $836.39 an ounce at 1:19 p.m. in Singapore. Silver for immediate delivery was little changed at $13.7250 an ounce.
Gold is supported as crude oil prices advanced, K C Wong, trader at Standard Bank Asia Ltd. in Singapore, said today by phone. ``Tropical Storm Gustav is still pretty much on everybody's mind.''
Producers including ConocoPhillips, Royal Dutch Shell Plc and BP Plc evacuated rigs before the arrival of Gustav, forecast to become the worst Gulf of Mexico hurricane since Katrina. Gustav is forecast to reach Louisiana next week, passing through a region home to a quarter of U.S. oil output and 14 percent of natural gas production.
Crude oil for October delivery rose $1.34, or 1.2 percent, to $116.93 a barrel at 1:20 p.m. Singapore time on the New York Mercantile Exchange. Futures fell $2.56, or 2.2 percent, to $115.59 a barrel yesterday.
Price Volatility
``With the long-weekend coming up in the U.S. liquidity remains very thin,'' Tse said. ``Prices could jump up and down a few dollars quite easily.'' Markets in the U.S. will be closed Sept. 1 for a Labor Day holiday.
Still, gold prices appear to be attracting buying interest at current levels, said David Moore, commodity strategist at Commonwealth Bank of Australia in Sydney, in a report today.
``The gold price may also be deriving support from uncertainty associated with the diplomatic tensions involving Russia,'' he added.
December-delivery gold gained 0.6 percent to $841.80 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange at 1:22 p.m. in Singapore.
December-delivery gold traded in Shanghai was little changed at 185.50 yuan a gram ($844 an ounce).
In Japan, gold for August delivery on the Tokyo Commodity Exchange added 0.5 percent to 2,951 yen a gram ($842 an ounce).
To contact the reporter on this story: Feiwen Rong in Singapore at frong2@bloomberg.net
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Friday, August 29, 2008
Gold Heads for Second Weekly Gain as Oil Climbs, Dollar Falls
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