World Business

Gold rallies on weak dollar

(Xinhua)
Updated: 2010-04-15 10:38

CHICAGO - Gold futures on the COMEX Division of the New York Mercantile Exchange ended higher on Wednesday, as dollar slipped against other major currencies. Sliver and platinum both surged.

The most active gold contract for June delivery rose $6.2, or 0.5 percent, to finish at $1,159.6.

The US labor department said on Wednesday that US consumer prices index increased 0.1 percent in March on a seasonally adjusted basis, matching previous forecast. The government's core consumer price index remained unchanged, while economist had estimated a 0.1 percent increase, signaled low inflation expectations.

The CPI figures have proved Federal Reserve Chairman Ben Bernanke's point of view that inflation is not an immediate concern for US economy, and Federal Reserve will maintain its highly simulative policies of low interest rate for an extended period.

Since low interest rates reduced the opportunity cost of holding non-interest bearing gold, investors has switched to gold for safe-haven.

Dollar extended losses after report released on Wednesday showed sales at US retailers rose more vigorously than expected in March, suggesting a broadening of the manufacturing-led economic recovery.

Meanwhile, Singapore tightened monetary policy on Wednesday by allowing its currency to rise against the dollar in order to curb worsening inflation, which has added to the downward pressure on the dollar.

Upbeat corporate earnings also increased investor appetite for riskier assets, and tarnished dollar's appeal as safe-haven.

The decline of the dollar boosted investors' interest in gold as an alternative asset, and made it cheaper for other currency holders.

May silver was up 16.6 cents to $18.415 per ounce. July platinum surged $16.9 to $1,734.2 an ounce.