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UPDATE: PRECIOUS METALS: Weaker Dollar Moves NY Gold Higher10 days ago
(Updates with prices, comment, background.)
NEW YORK (Dow Jones)--A reversal weaker in the U.S. dollar and higher crude oil prices are pushing gold futures higher Tuesday, although the metal remains below all-time highs from the previous day's trading.
In recent trading, most-active December gold was up $7.40 at $1,108.80 an ounce on the Comex division of the New York Mercantile Exchange. Thinly traded nearby November gold was up $2.90 at $1,103.70.
"We've seen the dollar come off," says Patrick Donnelly, senior market strategist with Olympus Futures. "That's starting to push the gold higher."
Higher crude oil is helping gold, said George Gero, vice president with RBC Capital Markets Global Futures.
Nymex December crude was up $1.02 a barrel while the ICE Futures U.S. dollar index was down 0.069 point.
Further, "we're getting closer to options expiration and (traders) are defending their positions," he said.
Nov. 23 is the last trading day for gold options with a December expiration.
Gold futures rose sharply Monday to extend their record highs as the U.S. dollar weakened. The metal is considered a dollar hedge and, more broadly, an alternative currency. December gold hit a most-active record of $1,111.70. Nearby November gold hit $1,109.30, a front-month Comex record. Spot gold also hit an all-time peak of $1,111.15.
Last week, gold topped $1,100 for the first time on news that India's central bank bought 200 metric tons of the 403.3 tons the International Monetary Fund was planning to sell to fund lending programs for poor nations.
The metal has been supported by speculative buying--where participants purchase contracts based on expectations of rising or falling prices rather than to hedge production or obtain physical metal.
These, and other investors, have been buying gold as a hedge against the steadily weakening dollar and against inflation they see emerging from government spending to curb the economic crisis.
According to the most recent Commodity Futures Trading Commission data, speculative managed-money funds now hold more than 23 million ounces in positions indicating they think the metal's price will rise.
-By Matt Whittaker, Dow Jones Newswires; 212-416-2139; matt.whittaker@dowjones.com
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=QfH2r6Cl9SvBxovETZx1rA%3D%3D. You can use this link on the day this article is published and the following day.
By Matt Whittaker
Of DOW JONES NEWSWIRES
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