Gold Rises as Dollar, Oil Spark Investor Demand; Silver Gains

By Pham-Duy Nguyen

Aug. 28 (Bloomberg) -- Gold rose to the highest in more than two weeks as a weaker dollar and higher energy costs revived demand for the precious metal. Silver also gained.

UBS AG issued a ``strong tactical buy recommendation,'' the first in a year. The dollar fell as much as 0.6 percent against a weighted basket of six currencies before paring losses. Crude oil climbed for a fourth straight day, nearing $120 a barrel. Gold and oil reached records this year as the dollar fell to an all-time low against the euro.

``Gold looks very strong,'' said Matt Zeman, a metals trader at LaSalle Futures Group in Chicago. ``The dollar is very vulnerable and stalling out. And a lot of people think crude can go to $150.''

Gold futures for December delivery rose $13.80, or 1.7 percent, to $847.80 an ounce at 8:56 a.m. on the Comex division of the New York Mercantile Exchange. Earlier, the price touched $849.30, the highest since Aug. 11.

Silver futures for December delivery rose 48.7 cents, or 3.6 percent, to $14.055 an ounce on the Comex.

Before today, silver fell 9.1 percent this year, while gold dropped 0.5 percent.

To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.