By Halia Pavliva
May 15 (Bloomberg) -- Gold prices rose, extending a rally to two weeks, as investment demand increased on rising consumer prices and signs that a rally in U.S. equities may be ending. Silver futures fell.
The Standard & Poor’s 500 Index headed for a decline this week amid speculation that the rally has outpaced prospects for corporate profits and economic growth. Some investors buy gold as an alternative to shares. U.S. consumer prices excluding food and fuel climbed 0.3 percent, the Labor Department said today.
“For gold and silver, we are going into a win-win situation,” Ashraf Laidi, the chief market strategist at CMC Markets in London, said in a Bloomberg Television interview. “When we will have a retreat in the financials and the rest of the stocks, we will have some rotation into metals.”
Gold futures for June delivery advanced $2.90, or 0.3 percent, to $931.30 an ounce on the Comex division of the New York Mercantile Exchange. The price gained 1.8 percent this week, following a 3 percent increase last week.
“Gold prices have turned higher as the market’s focus turns to the unexpected jump in the core consumer-price index,” said Ralph Preston, a Heritage West Futures Inc. commodity analyst in San Diego. “A close above $930 could be explosive.”
Silver futures for July delivery slipped 3 cents, or 0.2 percent, to $14.01 an ounce. The metal still gained 0.4 percent this week.
Equities, Dollar
The S&P 500 is down 5.1 percent this week. The gauge rallied eight times in the past nine weeks as some economic reports suggested that the worst of the recession may be past.
The dollar has dropped 1.8 percent this month against a basket of six major currencies, enhancing the appeal of gold as an alternative investment.
“Gold has been the object of affection for hedge funds and also has paid increasing attention to the dollar lately,” said Tom Pawlicki, an analyst at MF Global in Chicago. “That helps explain why gold has rallied both when stocks have risen and fallen.”
Silver has climbed 24 percent this year, and gold is up 5.3 percent.
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