Daily Gold Update

Source: Bloomberg.com

London— Gold rose to a seven-month high in London on speculation that the dollar will weaken and demand for the precious metal used in jewelry will increase.

Bullion has climbed 5.4 percent this year as the dollar dropped, erasing earlier gains against the euro and yen. Global gold demand rose 5.7 percent in the fourth quarter, the first quarterly gain in more than a year, on increased investor demand and “physical'' purchases from jewelers, the World Gold Council said last week.

“Initially there was buying in Japan on the opening and we think that buying was related to the fact that the dollar is looking soft,'' said David Holmes, director of precious metals sales at Dresdner Kleinwort in London.

Gold for immediate delivery gained $2.70, or 0.4 percent, to $671.75 an ounce at 6:24 p.m. in London, after trading at $673.55, its highest since July 17.

Gold futures for April delivery rose $2.60 to $675.40 in electronic trading on the New York Mercantile Exchange. Floor trading in the U.S. is closed today for President's Day and in China all week for the Lunar New Year.

The euro traded at $1.3153 in London. The dollar and gold typically move in opposite directions as investors purchase the metal as a hedge against declines in the currency.

“The recent physical and investment buying has finally induced the expected self-motivated upside trend for gold,'' said Frederic Panizzutti, senior vice president of Geneva-based MKS Finance SA, one of Switzerland's four precious-metals refiners.

Gold is expected to rise for a seventh consecutive week, because of declines in the dollar, according to most analysts, investors and traders surveyed by Bloomberg last week.

Silver climbed 4 cents to $14.015 an ounce. Palladium rose $1.50 to $341 and platinum gained $9.50 to $1,216.