Do More With Reuters
Partner Services

Gold climbs 1 pct as oil firms, dollar weakens

Mon Jul 21, 2008 3:04pm IST
 
Email | Print | | Single Page
[-] Text [+]

By Jan Harvey

LONDON (Reuters) - Gold rose more than 1 percent in Europe on Monday as oil prices firmed after talks between Iran and world powers over the Islamic Republic's nuclear programme ended in stalemate, and as the dollar weakened against the euro.

Gold rose to $964.65/965.65 an ounce at 0911 GMT from $955.45/957.05 an ounce late in New York on Friday, when it fell to a one-week low of $949.50. Earlier on Monday it touched a session high of $968.25.

With producer de-hedging dying down and interest in physical gold lighter in the summer months, the external drivers of gold -- chiefly oil and the dollar -- are likely to continue outweighing fundamentals in the weeks to come, traders said.

"The physical side of the market is very quiet, and after all these big buy-backs in recent months we are not going to see a lot of demand from miners," said Wolfgang Wrzesniok-Rossbach, head of sales at precious metals trading group Heraeus.

"That leaves us with the speculators, and they are immediately reacting to whatever is going on the euro/dollar side and the oil side."

The dollar steadied on Monday having drifted lower in Asian trade as investors worried about the health of the U.S. financial sector ahead of a spate of U.S. bank earnings this week.

Gold tends to move in the opposite direction to the dollar, as it is bought as a hedge against weakness in the U.S. currency. A softer greenback also makes dollar-priced gold cheaper for holders of other currencies.

The precious metal also usually trades in line with oil, because of its appeal as an inflation hedge and its strength in crude prices boosts interest in commodities in general.  Continued...

Photo

special coverage

Budget 2009
Budget 2009

The government presents the budget for the full fiscal year 2009/10 on July 6.  Full Coverage 

Market Update

  • IndiaIndia
  • USUS
  • UKUK
  • Asia
  • Most Actives

SHOWCASE

Photo
Is the budget over-rated for personal finance?

Expectations are high given the outcome in the general elections.  Commentary 

 
Nilekani: Infosys' loss or govt’s gain?
Nilekani: Infosys' loss or govt’s gain?

Nandan Nilekani has resigned from the Infosys board to join the government.  Commentary | Slideshow 

 
Launched

Tata Motors announced the launch of Jaguar and Land Rover vehicles in India.  Slideshow | Video 

 
Satyam
The new Satyam

Stay updated with the developments at Satyam.  Full Coverage 

 
M&A Review
M&A Review

A review of mergers and acquisitions.  Full Coverage 

 
Financial Turmoil Timeline
Financial Turmoil Timeline

A round-up of measures taken by the U.S Federal Reserve since June 2007 to tackle the financial crisis.  Full Coverage