Gold Rises Most in 3 Weeks; Dollar Drop Spurs Demand

Source:

"Gold is in play"

Gold rose the most in three weeks as a sliding dollar increased the metal's appeal as an alternative investment.

The greenback tumbled for the first time in five sessions against the euro after a report showed the U.S. economy, the world's biggest, expanded in the third quarter for the first time since June 2008, stoking demand for higher-yielding assets. Before today, gold futures dropped 3.2% since Oct. 21 after reaching a record $1,072 an ounce a week earlier.

"Gold is in play," said Frank Lesh, a trader at FuturePath Trading LLC in Chicago. "The dollar is off because risk is back in favor. Risk appetite is equated with inflation, and you buy gold to fight inflation."

Gold futures for December delivery rose $16.60, or 1.6%, to $1,047.10 an ounce on the New York Mercantile Exchange's Comex division, the biggest gain for a most-active contract since Oct. 6.

Earlier, the metal touched $1,026.90, matching the lowest price since Oct. 6. The decline in the previous five sessions marked the longest slump since March.

"At this level, some people consider gold cheap," said Bernard Sin, the head of currency and metals trading at bullion refiner MKS Finance SA in Geneva. "The dollar will continue to be the main driver."

The metal has gained 18% this year, heading for a ninth straight annual increase, while the dollar has declined 5.8% against the euro.

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