Gold up, palladium highest since 2001 on dollar

LONDON - Gold rose more than one percent on Monday and palladium hit its highest in nearly a decade, as the dollar fell after weekend comments at the G20 meeting and on market expectations of further quantitative easing.

By (Reuters)

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Published: Mon 25 Oct 2010, 7:49 PM

Last updated: Mon 6 Apr 2015, 11:44 AM

Spot palladium rose to $617.50, its highest since mid-2001, from $586.98 an ounce late in New York on Friday. It was at $609.05 an ounce at 1308 GMT.

Spot gold rose to $1,344.89 an ounce, off the 2-1/2 week low at $1,315.09 hit last Friday. It was at $1,326.70 late in New York on Friday.

Analysts said the Group of 20 (G20) finance ministers on Saturday pointed to a status quo in currency markets, with the dollar staying pressured due to market expectations for the Federal Reserve to unveil a second round of quantitative easing as early as November.

“This is to do with the fact that the G20 communique failed to produce anything concrete on the coordinated exchange rates policy,” Andrey Kryuchenkov, analyst with VTB Capital, said of the dollar’s loss and gold’s subsequent rise.

“There is still a lot of uncertainty about exchange rates... (and)... the size and format of the QE,” he added.

The dollar fell around 0.7 percent versus a major currency basket, making dollar-priced metals cheaper for non-U.S. investors. The U.S. gold futures for December delivery rose 1.5 percent to $1,345.5 an ounce.

“The differences still persist between countries as to what constitutes proper monetary and currency policy,” Commerzbank analyst Daniel Briesemann said. “That means tensions between different governments will continue and therefore gold should stay in demand among investors.”

Robust physical demand

Robust physical demand from India ahead of its important festival season, as well as from other countries, is likely to keep gold prices buoyed.

Concerns on the recovery of the global economy and inflation due to lax monetary policies have made gold a popular investment, pushing the precious metal up by a fifth this year, outpacing copper’s 16 percent gain.

BlackRock Inc, the world’s largest money manager, expected gold prices to rise further due to a lack of world production growth, increasing appetite among central banks to hold more gold as a safe-haven investment.

Silver was at $23.74 an ounce from $23.24 an ounce and platinum was at $1,699.67 an ounce from $1,667.75 an ounce.

“It’s more or less a dollar story, but it could be sustainable, there’s still a lot of reasons to be long gold - quantitative easing and the inflation that will come sooner or later,” said Deutsche Bank trader Michael Blumenroth.

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