Gold inclines as the dollar weakens after G-20 meeting

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Gold inclines as the dollar weakens after G-20 meeting

posted on Oct 25, 2010 11:19AM

The shiny metal advanced at the beginning of the week as the dollar's decline enhanced demand on the metal as an alternative investment.

Spot gold is trading at $1344.80 an ounce, recording a high of $1349.05 and a low of $1330.80.

Gold is starting this week with gains after witnessing the first weekly decline in six last week when the dollar rebounded slightly.

Last Friday, gold added $2.00 or 0.15% an ounce to close at $1327.90 an ounce, while gold price was setin London at $1322.50 per ounce inclining from $1319.00 during the AM fixing.

G-20 Finance Ministers and Chiefs agreed last weekend in South Korea to refrain from any "competitive devaluation" where they pledged to leave market moves according to supply and demand forces without any intervention.

The meeting did not give any clue that the Fed will not add to stimulus next week as they will probably keep interest rate near zero to boost the economy amid the undergoing slowdown.

The Fed will pump $2 trillion starting with $500 billion next month over the upcoming six months, according to Goldman Sachs Group Inc.

With the approach of the second-round stimulus by the US, the dollar is facing more downside pressure which may make gold seize the opportunity to climb to new highs.

Actually, the inverse relation between gold and dollar seemed to be very strong over the past few weeks which gave the dollar momentum to reach record highs.

The dollar index, which tracks the dollar movements versus a basket of major currencies, fell to a low of 76.70 on Monday relative to the day's opening price at 77.27.

Asian shares bounced driving oil to a high of $82.90 a barrel from Friday's closing at $81.97, where the black gold has also took advantage of the dollar's depreciation.

The yellow metal may also gain some help from physical demand from India, during the festival season that will end in November, and other Asian economies.

Among other precious metals, platinum surged to $1695.50 from the day's opening at $1686.00, palladium edged up to $608.00 from $597.00, and silver slipped to $23.70 from 23.47, as of 08:10 GMT.

Source: http://www.ibtimes.com/news/75374/20101025/forex/xau-usd/gold-inclines-as-the-dollar-weakens-after-g-20-meeting-fundamental-precious-metals-2010-10-25.htm

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