Gold Rises Most in a Week as Declining Dollar Increases Demand

June 16 (Bloomberg) -- Gold rose the most in more than a week as oil rallied and the dollar weakened, increasing demand for the metal as an alternative investment. Silver and platinum also gained.

The U.S. Dollar Index, a gauge of the greenback’s value, dropped as much as 1 percent on concern that leaders of Brazil, Russia, India and China will act to lessen their dependence on the dollar as a reserve currency at a meeting today in Russia. Gold slid 3.6 percent in the previous two sessions to the lowest in more than three weeks as the dollar index gained 2.2 percent.

“Gold took its cues from the dollar sell-off (as well as from a spike in crude oil) and vaulted higher,” Jon Nadler, a senior analyst at Kitco Inc., said today in a note. Oil fell 0.2 percent to $70.47 a barrel in New York after earlier jumping as much as 3 percent.

Gold futures for August delivery rose $4.70, or 0.5 percent, to $932.20 an ounce on the New York Mercantile Exchange’s Comex division. Bullion for immediate delivery climbed $6.32, or 0.7 percent, to $934.61 an ounce at 8:24 p.m. in London, halting a four-day decline, the longest since March.

“The U.S. currency continues to dictate direction,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said today in a note. “We expect gold to start consolidating” this week “as the dollar retreats.”

Gold slipped to $934 an ounce in the afternoon “fixing” in London, used by some mining companies to sell their output, from $936.75 in the morning fixing.

Finance ministers from Group of Eight industrialized nations agreed that it is prudent to consider steps to scale back economic stimulus measures once global growth resumes. The leaders asked the International Monetary Fund to examine how that can be done without causing a financial crisis.

Inflation Concern

“Provided this talk from policy makers intensifies towards the end of the year, we might see another strong rally in gold,” Kryuchenkov said. “Your average investor knows that G-8 finance ministers are already pondering rising inflation.”

Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, has remained at 1,132.15 metric tons, which it reached as of June 5, the company’s Web site shows. Gold held in ETF Securities Ltd.’s exchange-traded commodities fell 0.2 percent to 7.669 million ounces yesterday, from 7.681 million ounces on June 12, its Web site showed.

Silver futures for July delivery rose 10 cents, or 0.7 percent to $14.13 an ounce in New York. Silver for immediate delivery advanced 12.5 cents, or 0.9 percent, to $14.20 an ounce at 8:26 p.m. in London.

Platinum Advances

Platinum futures for July delivery gained $7.20, or 0.6 percent, to $1,220.90 an ounce in New York, the first increase in four sessions. Palladium futures for September delivery slid $3.20, or 1.3 percent, to $242.80 an ounce, the fourth-straight decline.

Platinum gained only because gold and silver rose and the dollar slumped, Kitco’s Nadler said by e-mail. “Based on fundamentals, and based on the auto sector’s lack of vital signs, there is little to compel people to run out and buy the noble metals.”

Platinum and palladium are used mostly in emission-control parts in cars and trucks. Some investors buy both metals as a store of value when the dollar falls or oil gains, boosting inflation concerns.

Platinum held in ETF Securities’ exchange-traded commodities gained 0.9 percent to 342,921 ounces yesterday, the company’s Web site showed. Silver holdings were little changed and palladium assets were unchanged.