Gold Rises in Asia as Crude Gains, U.S. Dollar Rally Stalls

By Glenys Sim

Aug. 7 (Bloomberg) -- Gold gained in Asia after crude oil rose from a three-month low, boosting the precious metal's appeal as an inflation hedge, while the dollar's rebound paused.

Bullion has lost 5 percent in the past month as oil prices slumped 16 percent and the dollar gained 1.9 percent against the euro. Crude gained after declining yesterday on an unexpected gain in U.S. supplies. The dollar was barely changed near a seven-week peak against the euro ahead of a European Central Bank meeting today at which rates may be left unchanged.

``We are cautiously retaining our bullish medium-term view on gold,'' Standard Chartered Plc analysts Helen Henton and Dan Smith said in a report yesterday. ``Global conditions are likely to deteriorate further in the months ahead, inflation risks remain and the U.S. dollar is likely to remain weak this year.''

Bullion for immediate delivery gained as much as $2.76, or 0.3 percent, to $882.56 an ounce, and traded at $881.88 at 10:11 a.m. in Singapore. Silver for immediate delivery was little changed at $16.58 an ounce.

Crude Oil for September delivery on the New York Mercantile Exchange was up 0.2 percent at $118.86 a barrel, after falling to the lowest close since May 2 yesterday as an Energy Department report showed crude supplies rose 1.61 million barrels last week.

The dollar was little changed after rising for four days against a weighted basket of six currencies, including the euro and yen. The currency stood at $1.5438 against the euro, compared with $1.5408 late yesterday in New York. The dollar touched $1.5398 yesterday, the strongest since June 16.

Gold for December delivery rose 0.9 percent to $891.30 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange at 10:17 a.m. Singapore time.

Gold for June delivery on the Tokyo Commodity Exchange was 0.7 percent higher at 3,122 yen a gram ($888 an ounce) at the 11 a.m. local time break.

To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net