Gold May Advance in London, New York Trading as Dollar Weakens

By Stuart Wallace

Oct. 21 (Bloomberg) -- Gold, little changed today in London and New York, may advance as a weaker dollar spurs demand from investors seeking to hedge against further declines in the currency.

The Dollar Index, a six-currency gauge of the greenback’s strength, fell as much as 0.3 percent, extending its annual decline to 7.3 percent. Asian equities fell for the first time in three days and stocks in Europe were little changed. Some investors buy gold to diversify their portfolios.

“The yellow metal will continue to look to the dollar and equities for direction, with gold broadly tracking risk sentiment,” James Moore, an analyst at TheBullionDesk.com in London, said in an e-mail.

Gold for immediate delivery rose $3.30, or 0.3 percent, to $1,058.50 an ounce as of 9:05 a.m. in London. The metal reached a record $1,070.80 on Oct. 14 and is heading for a ninth consecutive annual advance.

Gold for December delivery added 50 cents, or 0.1 percent, to $1,059.10 an ounce on the Comex division of the New York Mercantile Exchange.

Holdings of gold in exchange-traded commodities of ETF Securities Ltd. fell to 7.99 million ounces from 8.1 million ounces the day before, according to figures on the company’s Web site today. Gold holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, were unchanged at 1,109.31 metric tons as of Oct. 20.

‘Moving Higher’

“There’s every reason to suggest gold will carry on moving higher,” David Baker, managing partner of Baker Steel Capital Managers, said in a Bloomberg Television interview. “We still see a lot of value in the market.”

Hedge funds and other large speculators are holding a record long position, or bets on higher prices, in U.S. gold futures, data from the Commodity Futures Trading Commission show. The biggest bet among options traders is for gold to reach $1,200 by December.

Among other precious metals for immediate delivery, silver added 5 cents, or 0.3 percent, to $17.545 an ounce, platinum gained $5.50, or 0.4 percent, to $1,356 an ounce and palladium dropped 20 cents, or 0.1 percent, to $336.30 an ounce.

Rhodium for immediate delivery added $50, or 2.8 percent, to $1,850 an ounce, according to prices from Johnson Matthey Plc on Bloomberg. That’s the highest since October last year.

To contact the reporter on this story: Stuart Wallace in London at swallace6@bloomberg.net