Daily Gold Update

Source: Bloomberg

New York— Gold rebounded as the dollar declined, bolstering the appeal of the precious metal as an alternative investment. Silver prices also gained. The dollar dropped as much as 0.4 percent against a basket of six major currencies. Before today, gold climbed 19 percent this year as investors sought to protect their wealth from the greenback�s slump. The metal, heading for a ninth straight annual gain, reached a record $1,072 an ounce on Oct. 14. �It is still too premature to short gold,� Andrey Kryuchenkov, an analyst at VTB Capital in London, said in a report. �The dollar remains vulnerable, and investor appetite for gold could re-emerge very quickly.� Gold futures for December delivery rose $4.10, or 0.4 percent, to $1,055.60 at 11:24 a.m. on the Comex division of the New York Mercantile Exchange. Before today, the metal gained 4.2 percent this month.

CME Group Inc. will allow gold to be used as collateral to back trades on its exchange as an alternative to debt or equities, according to a member notice dated Oct. 16. Gold would be the first commodity to be used in margin payments, CME spokesman Jeremy Hughes said. LCH.Clearnet Group Ltd., Europe�s largest clearinghouse, said it is considering accepting gold for collateral. Hedge funds and other large speculators hold their most- bullish position ever in gold futures. So-called net-long positions, or bets prices will rise, increased by 6 percent to 253,955 contracts in the week ended Oct. 13, according to the Commodity Futures Trading Commission. See full story.