Gold Rebounds as Dollar Drops Against Euro; Platinum Climbs

Aug. 19 (Bloomberg) -- Gold rose as the dollar’s decline enhanced the allure of the precious metal as an alternative investment. Platinum also gained. Silver futures dropped to the lowest level this month.

The dollar fell as much as 0.9 percent against the euro. Gold has mostly moved in tandem with the euro in every session since Aug. 5. The metal has declined 1.2 percent this month. In the second quarter, global gold demand dropped to a six-year low.

“Gold is responding to the dollar,” said Stephen Platt, a futures strategist at Archer Financial Services in Chicago. “The market is probably not going very far in either direction for months.”

Gold futures for December delivery gained $5.60, or 0.6 percent, to $944.80 an ounce on the Comex division of the New York Mercantile Exchange. Earlier, the price dropped as much as 0.6 percent. The metal has advanced 6.8 percent this year.

Bullion for immediate delivery rose $3.06, or 0.3 percent, to $941.66 an ounce at 3:23 p.m. New York time.

“Gold has taken the lead and seen some fresh investment interest,” Miguel Perez-Santalla, a Heraeus Precious Metals Management sales vice president in New York, said in an e-mail.

Gold demand dropped 8.6 percent to 719.5 metric tons in the second quarter from a year earlier as the recession curbed buying by jewelers and electronics producers, the World Gold Council said today. Jewelry consumption declined 22 percent, while investment demand increased 46 percent.

Consumer Spending

“In the unlikely event that the global financial and economic crisis abates in the short term, then investment demand would be expected to fall,” Mark O’Byrne, the managing director of brokerage GoldCore Ltd. in Dublin, said in an e-mail. “An improvement in the global economy and consumer spending would likely see a resumption of jewelry demand.”

Central banks were net buyers in the quarter for the first time since at least 2000, council data showed.

Platinum futures for October delivery gained $9.30, or 0.8 percent, to $1,241.40 an ounce on Nymex. The price has climbed 32 percent this year.

Palladium futures for September delivery fell 55 cents, or 0.2 percent, to $271.80 an ounce. The metal has advanced 44 percent this year.

Silver for December delivery fell 8.6 cents, or 0.6 percent, to $13.909 an ounce on the Comex. Earlier, the price touched $13.53, the lowest level since July 31. The metal has gained 23 percent this year.