NEW YORK (MarketWatch) — Gold futures rallied more than 2% Monday to their highest level in two months as a falling U.S. dollar increased the metal’s appeal as an alternative investment and as surging crude-oil prices raised gold’s value as a hedge against rising prices.
Gold for February delivery jumped $22.50, or 2.7%, to $843 an ounce on the Comex division of the New York Mercantile Exchange, the highest since Oct. 15.
Monday’s gain in gold followed its 9% advance in the past week.
The front-month December contract, which expires on Dec. 29, rose 2.3% to $838.10 an ounce. Open interest, or the number of outstanding contracts of the December contract, stood at 811 as of Friday, or 81,100 ounces, according to Comex data.
Gold inventories held by the Comex for futures delivery stood at 2,846,513 ounces as of Friday, down 90,915 ounces from a day ago, according to the latest data from the exchange.
“A weaker dollar coupled with firmer energy prices ahead of the OPEC meeting” boosted gold values, said Edward Meir, a metals analyst at MF Global.
In currencies trading, the dollar moved lower against its major rivals. The dollar index which tracks the value of the greenback against other major currencies, lot 1.4%.
Gold prices, denominated in dollars, tend to move in the opposite direction of the greenback.
Crude oil rallied more than 8% to above $50 on expectations that the Organization of Petroleum Exporting Countries will cut its output at Wednesday’s meeting.
In gold spot trading, the London afternoon gold-fixing price — a benchmark for gold traded directly between big institutions — stood at $827.50 an ounce Monday morning, up $1 from Friday afternoon.
In other metals, March silver futures rose 1.1% to $10.345 an ounce. January platinum gained 1.6% to $835.20 an ounce and March palladium added 0.4% to $175.65 an ounce.
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