Gold Rises to Five-Week High as Dollar Eases; Silver Climbs

July 23rd, 2009

By Halia Pavliva, Nicholas Larkin (Bloomberg)

Gold prices rose to the highest in five weeks as the dollar retreated, supporting demand for the precious metal as an alternative investment. Silver also gained.

Gold has climbed 1.8 percent this week as the dollar dropped 0.7 percent against the euro. Earlier, the metal reached $957.50 an ounce, the highest since June 12.

“There are good reasons to believe the dollar should weaken, and in that case, gold will be a beneficiary, but it’s not necessarily going to occur overnight,” Patrick Chidley, an analyst at Barnard Jacobs Mellet LLC, said in an e-mail.

Gold futures for August delivery rose $1.50, or 0.2 percent, to $954.80 on the Comex division of the New York Mercantile Exchange.

Silver for September delivery gained 7 cents, or 0.5 percent, to $13.77 an ounce.

Gold for immediate delivery climbed 45 cents to $951.85 at 2:52 p.m. New York time. Silver rose 0.8 percent to $13.80.

U.S. equities rose, sending the Dow Jones Industrial Average above 9,000 for the first time since January, after some companies reported earnings that topped analysts’ estimates and home resales increased more than forecast.

“Earlier this month, economic worries encouraged investors to buy the dollar and Treasuries,” Pradeep Unni, an analyst at Richcomm Global Services in Dubai, said in a report. “Appetite for other assets, including gold and equities, seems to be returning.”

Gold is up 8 percent this year, and silver gained 22 percent.

In gold, “stable trade above $940 should build for another advance on $959 resistance,” said Ralph Preston, a Heritage West Futures Inc. commodity analyst in San Diego.

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