Gold Gains for First Time in Three Days as Dollar Declines
Gold rose for the first time in three days as investors bought the metal as a store of value after the dollar declined on speculation a U.S. government housing report will show further evidence of a slowdown in the world's largest economy.

Bullion has rallied 19 percent since Sept. 11 after bank failures encouraged purchases of commodities as a haven from the credit market turmoil. The dollar fell ahead of a report which economists say will show new U.S. home sales dropped and as traders raised bets for a Federal Reserve cut in interest rates next month.

''Everything is about the deteriorating economy in the U.S. and the impact on commodities like precious metals and commodity- traded currencies,'' said Ellison Chu, manager of precious metals at Standard Bank Asia Ltd. A weaker dollar makes commodities appealing to investors as an alternative investment.

Gold for immediate delivery advanced as much as 0.9 percent, to $890.15 an ounce, and traded at $889.78 an ounce at 1:32 p.m. in Singapore. Silver for immediate delivery gained as much as 1.2 percent, to $13.4125 an ounce and last traded at $13.40 an ounce.

The dollar fell to $1.4716 per euro as of 1:24 p.m. in Singapore from $1.4621 late in New York yesterday. It declined to 105.88 yen from 106.11. The greenback also weakened as Treasury Secretary Henry Paulson said the financial system was ''frozen to a large extent'' and Fed Chairman Ben S. Bernanke said the U.S. is facing ''grave threats'' to market stability.

Rescue Plan

There are concerns a $700 billion bank rescue plan may fail to prevent recession in the U.S. and erode the appeal of U.S. Treasuries and drive down the dollar, analysts said.

Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, has increased 6.7 percent this week to a record 724.9 metric tons after climbing 11 percent last week. The fund is the eighth-largest holder of bullion, according to the World Gold Council. The top three holders are central banks in the U.S. and Germany and the International Monetary Fund.

''I have never seen volatility like this in my career,'' said Chu, who has traded gold for 24 years. ''It's a bad month for trading gold,'' he said.

With China closed for holidays next week, he estimates traders will be largely neutral in their positions and gold will trade between $850 and $900 an ounce this week.

Markets in China, the largest consumer of gold after India, will be closed from Sept. 29 to Oct. 3 for the National Day holidays. Trading will resume on Oct. 6.

Gold for December delivery was little changed at $895.80 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange. Gold for December delivery in shanghai was up 1.2 percent to 196.95 yuan a gram ($897 an ounce).

Gold for August delivery on the Tokyo Commodity Exchange dropped 0.6 percent to 3,027 yen a gram ($890 an ounce).


Related Products:

                                                                      

       aluminum tube            aluminum fin strip     copolymer coated  aluminum tape       kitchen cabinet                      zinc strip