Gold Rises in New York on Speculation Dollar Rally Will Stall

Jan. 26 (Bloomberg) -- Gold futures in New York rose on speculation that the dollar’s rally will stall, boosting the appeal of the precious metal as an alternative investment.

The dollar rose as much as 0.6 percent against a basket of six major currencies before retreating. Gold is up 21 percent in the past year as the dollar fell 7.4 percent.

“As long as the dollar doesn’t strengthen anymore from here, gold is a buy,” said Frank McGhee, the head dealer at Integrated Brokerage Services in Chicago.

Gold futures for April delivery rose $2.70, or 0.3 percent, to $1,099.50 an ounce on the New York Mercantile Exchange’s Comex unit. Earlier, the price dropped to $1,086.50.

Gold also gained on speculation the precious metal will resume its long-term rally, after the most-active futures failed to drop below its 100-day moving average of about $1,085, which some analysts said may create buying interest.

“The bottom line is that gold bounced from a technical breakout point, so you’ve got buyers coming in,” said Tom Schweer, a senior market strategist at LaSalle Futures Group in Chicago.

The price hasn’t traded below its 100-day moving average since mid-July, and gold has found support near that level since at least the end of 2008, data show. The metal rose for the ninth straight year in 2009, surging 24 percent and touching a record $1,227.50 on Dec. 3.

Silver, Platinum Fall

Silver and platinum, precious metals that have wider industrial uses than gold, fell on speculation China’s moves to curb lending will slow global growth and dampen demand.

China is starting to take steps to cool the economy, which grew in the fourth quarter at the fastest pace since 2007. The central bank ordered lenders on Jan. 12 to raise the ratio of deposits they hold in reserve, limiting the amount of cash available for loans.

“China is tightening things up and slowing things down,” said McGhee. “All the China talk has brought the metals down.”

Silver for March delivery fell 28.5 cents, or 1.7 percent, to $16.86 an ounce on the Comex. Platinum futures for April delivery slipped $14.80, or 1 percent, to $1,531.30 an ounce on the Nymex. Palladium futures for March delivery lost $12.45, or 2.8 percent, to $427.55 an ounce.