Gold prices rise for 2nd day on weaker dollar
By STEVENSON JACOBS, AP Business Writer
Wednesday, August 20, 2008 4:35 PM CDT
NEW YORK 8/19/08 — Gold prices traded higher for a second day Tuesday after the dollar lost ground against the euro, boosting demand for precious metals as inflation hedge. Silver and copper also rose.
Other commodities traded mixed, with crude oil rebounding back above $114 a barrel and wheat and soybeans falling.
The dollar turned lower against some rival currencies after the U.S. government said wholesale inflation shot higher in July. The 15-nation euro rose to $1.4768 in late New York trading from $1.4697 late Monday.
A falling dollar generally encourages investors to buy precious metals, which are known for holding their value better than many other investments. A weaker greenback also makes dollar-denominated commodities like gold cheaper to overseas investors.
Gold for December delivery rose $11.10 to settle at $816.80 an ounce on the New York Mercantile Exchange, after earlier rising as high as $822.90. Prices rose $13.60 on Monday to settle at $805.70. On Friday, gold fell $22.40 to settle at $792.10, giving the metal its biggest weekly loss in 25 years.
Other precious metals also rose Monday. Silver for December delivery added 0.3 cent to settle at $13.22 an ounce on the Nymex, while December copper added 11.8 cents to settle at $3.427 a bushel.
Jon Nadler, analyst with Kitco Bullion Dealers Montreal, said in a note that the dollar’s slide “sparked some fresh buys in ... precious metals” but cautioned that prices could turn lower again as investors continue to pull money out of the futures markets.
The weaker dollar also boosted crude prices, which settled higher Monday for the first time in four sessions.
Light, sweet crude for September delivery rose $1.66 to settle at $114.53 on the New York Mercantile Exchange, after alternating between positive and negative territory earlier in the day. The September contract expires Wednesday, adding to the volatility.
Other energy futures also traded higher. Heating oil rose 3.89 cents to settle at $3.1237 a gallon on the Nymex, while gasoline prices rose 4.87 cents to settle at $2.639 a gallon.
Meanwhile, agriculture futures traded mostly lower on the Chicago Board of Trade.
Wheat for September delivery fell 14.5 cents to settle at $8.455 a bushel, while December corn added 11.75 cents to settle at $5.845 a bushel. November soybeans dropped 13 cents to settle at $12.76 a bushel.
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