Gold Rises to 14-Week High as Dollar Sags; Platinum Tops $1,500

Jul 01, 2014 3:09 pm ET

July 1 (Bloomberg) -- Gold futures rose to a 14-week high as the dollar’s decline boosted demand for the precious metal as an alternative investment. Platinum climbed to the costliest since September on supply concerns, topping $1,500 an ounce.

The greenback touched a seven-week low against a basket of 10 currencies as the Institute for Supply Management said that its factory index was little changed in June from May. Gold advanced 3 percent in the second quarter as the dollar fell 1.2 percent.

This year, gold has climbed 10 percent as escalating violence in Iraq and Ukraine boosted demand for the metal as a haven. The Federal Reserve has said that U.S. interest rates will stay low for a “considerable time.”

“The dollar weakness is helping gold stay supported at the current levels,” Mike Dragosits, a senior commodity strategist at TD Securities in Toronto, said in a telephone interview. “Economic data will determine how dovish the Fed remains, and that will guide gold.”

On the Comex in New York, gold futures for August delivery rose 0.3 percent to settle at $1,326.60 an ounce at 1:50 p.m. Earlier, the price reached $1,334.90, the highest for a most- active contract since March 24. Yesterday, the metal capped a consecutive quarterly advance for the first time since 2011.

Yesterday, global holdings in exchange-traded products backed by gold increased 0.4 percent to 1,722.4 metric tons, the highest since June 2, data compiled by Bloomberg show.

Bond Purchases

The Fed’s bond purchases have been reduced to $35 billion a month from $85 billion in 2013. Gold climbed 70 percent from December 2008 to June 2011 as the central bank bought debt and held borrowing costs near zero percent to bolster the economy.

On the New York Mercantile Exchange, platinum futures for October delivery jumped 2.2 percent to $1,515. Earlier, the price reached $1,516.70, the highest since Sept. 4.

The market faces a “sizable” deficit in 2014 after a five-month strike by 70,000 miners in South Africa crippled output, Citigroup Inc. has said.

The nation is the largest producer of the metal. On June 26, companies reported as many as 90 percent of workers returned to their job after a labor settlement on June 24.

“There is a lot of concern that it will take very long to normalize production,” Dragosits of TD Securities said.

Palladium futures for September delivery gained 1.4 percent to $854.60 an ounce. The price climbed for the seventh straight session, the longest rally since March 7. Russia is the top producer, followed by South Africa.

Silver futures for September delivery rose 0.3 percent to $21.117 an ounce on the Comex. Earlier, the price reached $21.275, the highest since March 17.

--With assistance from Maria Kolesnikova in London.