By Glenys Sim
May 13 (Bloomberg) -- Gold climbed to the highest level in six weeks as a drop in the dollar boosted demand for the precious metal as a store of value.
Bullion has gained 1.2 percent this week as the Dollar Index, which tracks the greenback against six major world currencies, slid 0.6 percent in the same period to a four-month low today. Gold was also boosted by crude oil’s rally to a six- month high, increasing demand for the metal as a hedge against accelerating consumer prices.
There may be “a spike in inflation” following U.S. government measures to revive the economy, Raymond Goldie, an analyst at Salman Partners Inc., said in a report. The measures may generate “an excess of U.S. dollars in foreign markets, ultimately creating weakness in the U.S. dollar,” he wrote.
Gold for immediate delivery gained as much as 0.5 percent to $928.17 an ounce, the highest since April 2, and traded at $927.63 at 2 p.m. Singapore time. Bullion, denominated in dollars, tends to move in the opposite direction to the currency.
Gold for June delivery in New York added as much as 0.6 percent to $929 an ounce before trading at $928.70.
The dollar fell for a second day to a seven-week low versus the euro after Chinese reports added to signs the worst of the global economic slump is over, sapping demand for the currency as a refuge.
“Given the inverse relationship between the U.S dollar and the price of gold and silver, this should provide a positive catalyst for the price of the precious metals,” said Goldie.
Among other precious metals for immediate delivery, platinum was up 0.9 percent at $1,145 an ounce and palladium traded little changed at $234.50 an ounce. Silver gained as much as 1 percent to $14.38 an ounce, the highest since Feb. 24, before trading at $14.32.
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