Gold Rises as Oil Rebounds, Dollar Retreats; Silver Advances

By Pham-Duy Nguyen

Aug. 7 (Bloomberg) -- Gold rose for the first time in a week as the dollar retreated and energy costs gained, boosting the appeal of the precious metal as a hedge against inflation. Silver also advanced.

Crude-oil futures rose as much as 2.7 percent to $121.78 a barrel after shedding almost $7 this week. Gold fell under $900 an ounce for the first time since June on Aug. 4, following a broader decline in commodities such as oil, copper and corn. Before today, gold slid 4.3 percent since July 31 and was down 15 percent from a record $1,033.90 in March.

``Commodities are not dead,'' said Walter Otstott, a senior broker at Dallas Commodity Co. in Dallas. ``Prices for gold and silver look attractive down here. You have a weaker dollar, energy concerns, economic concerns, geopolitical concerns. The demand for metals is not going to go away.''

Gold futures for December delivery rose $3.20, or 0.4 percent, to $886.20 an ounce at 9:22 a.m. on the Comex division of the New York Mercantile Exchange. Earlier, the price gained as much as 1.1 percent.

Silver futures for September delivery rose 4.5 cents, or 0.3 percent, to $16.55 an ounce on the Comex. Before today, silver gained 11 percent this year, while gold advanced 5.4 percent.

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