Gold Futures Climb to two-and-a-half-month High
SAN FRANCISCO (MarketWatch) — Gold futures climbed Tuesday to their highest level since mid-April, as weakness in the dollar and rising crude-oil prices burnished the precious metal’s investment appeal.
Carrying forward with its recent rally, gold for August delivery rose $16.50 to $944.80 an ounce on the New York Mercantile Exchange. It climbed as high as $947 earlier in the session, the contract’s highest intraday level since April 17.
Gold’s gains can be “attributed to both further weakness in the dollar and more near-record highs in oil,” said David Beahm, a vice president at a coin and precious metals retailer.
Mounting risk aversion and sliding equities in Europe and overnight in Asia left the dollar in a defensive posture in foreign-exchange trading.
The Dow Jones Industrial Average lost more than 14% in the first half of this year.
Gold has seen “increased support as a safe haven investment during these uncertain economic times,” Beahm said in emailed comments. “Coming off their worst June since the 1930s, the financial markets are just too volatile right now for many investors to feel confident.”
Eyeing Interest
All eyes will be on the ECB [European Central Bank] on Thursday — looking to see what the board will do with interest rates, said Beahm. “Should they raise rates, which all signs are pointing toward, the dollar will fall even further and commodities will shoot upward,” he said.
The European Central Bank is widely expected to hike its key lending rate by a quarter of a percentage point, to 4.25%, on Thursday.
In the energy pits, crude futures climbed past $143 a barrel, as weakness in the U.S. dollar and geopolitical jitters underpinned demand.
“With inflation still at the forefront of most central banks’ concerns, investors are likely to favor those assets which offer anti-inflationary properties,” said James Moore, analyst with TheBullionDesk.com, in a research note. Gold is typically seen as a good hedge against inflation. . .
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