Gold rose for the third straight day to hit a new eight-week high above $942 per ounce today, buoyed by firmness in oil prices and the dollar's recent slide to its lowest level in nearly five months.
But gains were mainly driven by funds buying US gold futures, resulting in arbitrage cash gold purchases, while a rise in Asian currencies against the dollar capped the price of gold denominated in regional currencies, traders said.
“It's up mainly because of short-covering in the market, said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.
“The dollar is weakening again and the oil price is up, which favours gold for a little while.” Spot gold rose 0.5 per cent to $941.90 an ounce by 6.37am, compared with the New York notional close of $937.10.
It earlier rose to $942.75, its highest price since March 26th.
The dollar fell to its lowest level since January 1st against a basket of major currencies on Thursday after the Federal Reserve said it had considered buying more securities, raising concerns the global financial system could be flooded with more dollars.
Crude oil stayed above $60 a barrel after yesterday's government data showed a steep drop in US crude and gasoline inventories ahead of the summer driving season.
US gold futures for June delivery rose 0.5 per cent to $942.1 per ounce from their settlement yesterday on the COMEX division of the New York Mercantile Exchange.
In Tokyo, yen-based gold futures posted narrower gains as the yen rose to a two-month high against the dollar. A higher yen deflates yen-based gold futures prices.
Reuters