Source: Bloomberg
New York— Gold and silver rose for a second straight day in New York on speculation interest rates in the U.S. will remain steady, weakening the dollar and boosting the appeal of precious metals as an alternative investment.
Gold generally moves in the opposite direction of the dollar, which fell against the euro today. The Labor Department reported U.S. employers added fewer jobs than expected in April, damping expectations that the Federal Reserve will raise interest rates anytime soon.
“Gold is going higher because of the dollar weakness,'' said Marty McNeill, a trader at R.F. Lafferty Inc. in New York. “The employment numbers are a little lower than expected so the Fed is just going to keep steady.''
Gold futures for June delivery rose $5.30, or 0.8 percent, to $689.70 an ounce on the Comex division of the New York Mercantile Exchange, the highest close since April 23. The price gained 1.2 percent this week after dropping to a one-month low of $670 on May 2. It was the eighth weekly gain in nine.
Job growth in the U.S. fell to its lowest in more than two years, pushing the euro to within a penny of its record. Gold and the euro have moved together 71 percent of the time this year.
The euro traded 0.5 percent higher against the dollar, at $1.3611, a week after reaching a record $1.3681. The dollar was also lower against the British pound, the Canadian dollar and the Japanese yen. Before today, the euro had gained 2.7 percent this year against the dollar while gold was up 7.3 percent.
`Not Anxious'
“The dollar continues to be weak against the major currencies and that's feeding the buying interest in precious metals,'' said Stephen Platt, a commodity analyst at Archer Financial Services Inc. in Chicago. “The Fed is not going to be anxious to tip the scale one way or another on interest rates.''
The Fed has kept the overnight lending rate between banks at 5.25 percent since June. The European Central Bank raised its benchmark rate to 3.75 percent in March. Higher interest rates tend to make holding gold less attractive because the metal has no fixed returns.
Silver for July delivery rose 2 cents, or 0.2 percent, to $13.53 an ounce. The price fell for the third straight week. Before today, silver had gained 4.5 percent this year.
A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.
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