Gold continues to rise as commodities rebounded and remained as a hedge against inflation. According to an expert, "There are still a lot of strong economies that want to buy commodities." With the recent pullback, people will resume buying the metal as a hedge against inflation.
By Nicholas Larkin and Pham-Duy Nguyen
Gold rose the most this month as commodities rebounded, boosting the appeal of the precious metal as a hedge against inflation. Silver jumped more than 4 percent.
The Thomson Reuters/Jefferies CRB Index of 19 raw materials rose as much as 2 percent, ending a three-session slump, as grain and energy prices surged. Analysts surveyed by Germany’s Ifo research institute raised their global inflation forecast for this year to 3.8 percent from 3.4 percent, a report showed today.
“The risk appetite is coming back to commodities across the board,” said Adam Klopfenstein, a senior strategist at Lind-Waldock, a broker in Chicago. “There are still a lot of strong economies that want to buy commodities. Anytime you see a pullback, people will come in and buy gold to hedge against inflation and diversify away from the dollar.”
Gold futures for June delivery rose $16, or 1.1 percent, to $1,496 an ounce at 11:20 a.m. on the Comex in New York. A close at that price would mark the biggest gain for a most-active contract since April 29.
Accelerating inflation, Europe’s debt crisis, a slumping dollar and fighting in Libya boosted gold to a record $1,577.40 on May 2.
Gold held in exchange-traded products fell 1.49 metric tons to 2,037.8 tons yesterday, the lowest since April 7, data compiled by Bloomberg show. Before today, futures dropped 4.9 percent this month.
“Perceptions that gold may have put in a medium-term top in the upper $1,570s before the month got under way probably contributed to the exodus from the ETP niche,” said Jon Nadler, an analyst at Kitco Inc. in Montreal.
Silver futures for July delivery gained $1.589, or 4.7 percent, to $35.08 an ounce. The metal slumped 4.3 percent in the previous two days.
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