Gold futures climbed for the first time in three days in New York as a weaker dollar increased demand for the precious metal as an alternative investment.
The Bloomberg U.S. Dollar Index dropped as much as 0.2%. Buying to cover bets on lower prices also helped support bullion after the metal touched a four-month low yesterday, according to Jim Wyckoff, a senior analyst at Kitco Inc., a research company in Montreal.
“Gold prices are modestly higher on short covering and some perceived bargain hunting,” Wyckoff said in a report. “The weaker U.S. dollar index is also a bullish” factor, he said.
Gold futures for December delivery rose less than 0.1% to settle at $1,244.10 an ounce at 1:51 p.m. on the Comex in New York. Prices yesterday fell to $1,235.80, the lowest since July 9.
Bullion is set for the first annual drop in 13 years. Some investors lost faith in the metal as a store of value. Data this week showed U.S. jobless claims fell more than forecast after minutes from the Federal Reserve’s last meeting revealed policy makers expected further improvement in the labor market to warrant trimming stimulus in the coming months.
Call options entitling owners to buy gold at $3,000 by December 2015 traded 7,850 contracts yesterday on the Comex, more than triple the amount of the next most-active option, data compiled by Bloomberg show. The contract was also the most- traded option the previous day.
Billionaire hedge-fund manager John Paulson, the largest holder in the SPDR Gold Trust, the biggest gold ETP, told clients this week that he wouldn’t personally invest more money in his gold fund because it isn’t clear when inflation will accelerate, according to a person familiar with the matter.
Silver futures for March delivery declined 0.4% to $19.901 an ounce in New York.
On the New York Mercantile Exchange, platinum futures for January delivery dropped 0.6% to $1,382.70 an ounce. Palladium futures for March delivery gained 0.1% to $716.35 an ounce.
Eskom Holdings SOC Ltd. said South Africa’s power system will remain constrained next week even as the utility lifted emergency restrictions that have curbed supplies to its biggest industrial clients. South Africa accounts for 72% of platinum mine supply and 36% of palladium output, according to Barclays Plc.