Gold and Silver Rally as Dollar Weakens Against Euro, Oil Rises

By Pham-Duy Nguyen

Sept. 24 (Bloomberg) -- Gold rose for the second time this week as the dollar weakened against the euro and a gain in energy costs boosted the appeal of the precious metal as a hedge against inflation. Silver also advanced.

The euro climbed as much as 0.7 percent against the dollar and crude oil approached $110 a barrel. Before today, gold gained 6.7 percent this month as the U.S. financial crisis sparked demand for haven assets. Gold reached a record $1,033.90 an ounce in March as the euro and crude headed for records in July.

``Gold is still responding to the dollar and energy, which could provide some support amid the backdrop for a bailout plan,'' said Stephen Platt, a commodity analyst at Archer Financial Services Inc. in Chicago. Should Congress approve the plan, ``gold will attract some foreign buyers because of a general inclination to reduce exposure to the dollar.''

Gold futures for December delivery rose $14.10, or 1.6 percent, to $905.30 an ounce at 9:22 a.m. on the Comex division of the New York Mercantile Exchange. The metal gained 13 percent last week, the most since October 1999.

Silver futures for December delivery rose 44 cents, or 3.3 percent, to $13.61 an ounce on the Comex.

Congress is weighing a $700 billion plan by U.S. Treasury Secretary Henry Paulson to ease the credit crisis that helped push Lehman Brothers Holdings Inc. into bankruptcy last week.

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