Gold and oil rose on dollar slumped
Gold rose above $1 000 on Friday as the precious metal continued to benefit from a weaker dollar amid growing risk appetite and inflation fears due to stronger oil prices.
The precious metal topped $1 000/oz on Tuesday for the first time since February, with spot gold staging a stunning run to an 18-month high of $1 007,45 on the same day, on technical buying momentum and a slide in the dollar.
News that Barrick Gold was cutting its hedgebook of forward gold sales also helped fuel gains.
"Fears about inflation are what is providing the support in the market now," said Kazuhiko Saito, chief analyst at Fujitomi Co Ltd.
Gold was at $1 001,50/oz at 05:31 GMT, up 0,6% from the notional New York close of $995,50.
US gold futures for December delivery were at $1 003,4/oz, up 0,7%.
December gold futures rose on Tuesday to as high as $1 009,70, their highest since February.
It remains to be seen, however, whether gold will be able to maintain these lofty levels, or mark new highs.
Saito said gold’s performance on Friday, when there was a possibility it could fall in fund profit-taking, would be crucial.
"Whether gold manages to hang on to $1 000 today will be important," he said.
The dollar hit a seven-month low against the yen on Friday after solid Chinese economic data triggered dollar-selling against higher-yielding currencies and other majors.
The dollar extended losses to hit its lowest level this year against the euro on Friday as broad dollar selling gathered pace following Chinese data that buoyed hopes for the global economy.
A weaker dollar enhances gold’s allure as an alternative asset, a factor which has helped fuel this week’s rally.
Oil prices rose to top $72 a barrel on Friday, extending the previous session’s four-day rally after a US report showed a surprise decline in crude stockpiles and Opec said it would maintain official output curbs.
Data on Friday showed the global economy was on track to lift itself out of its slump.
Widely awaited figures showed China’s industrial output expanded in August at the fastest rate in 12 months and narrowly topped forecasts, showing it was well on the road to recovery.
Other figures issued on Friday showed China’s exports in August fell by about 20 percent from a year earlier, and a top Chinese planning official said the country’s economic recovery fundamentals are not solid.
However, Friday’s data proved solid enough to erase worries about the state of the Chinese economy, traders said.
Japan’s economy grew a revised 0.6 percent in the three months to June, less than preliminary figures had shown but confirming that the economy had crawled out of recession after a full year of contraction.
The unexpected downward revision was mostly due to falls in inventories, which analysts took as a positive sign for the world’s No.2 economy.
Traders have pointed to a lack of physical buying of gold, including by major consumer India, as a factor likely to undermine the current rally.
There was a lack of fresh investment flows into the world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust.
The latest data showed holdings in the SPDR Gold Trust stood at 1 077,63 t, unchanged since Sept 4.
