Gold Rises as Dubai Bailout Hits Dollar


"Currency movements are likely to set the tone of trading over the forthcoming sessions."

Gold futures edged higher Monday, bouncing back from a one-month low as the U.S. dollar fell after Abu Dhabi pledged to bail out Dubai, boosting gold's investment appeal.

The dollar pulled back from its two-month high as the Dubai news alleviated investors' worries over Dubai's debt problems and encouraged them to hold assets denominated in riskier currencies. Investors also await this week's Federal Reserve's monetary policy meeting starting Tuesday.

The December front-month contract gained $3.90, or 0.3%, to $1,123.30 an ounce on the Comex division of the New York Mercantile Exchange. It ended at the lowest level since Nov. 13 on Friday, and fell 4.2% last week.

Gold for February delivery, the most active futures contract, ended up $3.90, or 0.3%, at $1,122.80.

Gold prices "are trading higher as news that Abu Dhabi has bailed out Dubai with a $10 billion cash injection weighed on the dollar," said Natalya Naqvi, a precious metals analyst at Barclays Capital.

"Currency movements are likely to set the tone of trading over the forthcoming sessions."

Holdings in SPDR Gold Trust stood unchanged at 1,116.25 metric tons as of Friday. Holdings reached a record high of 1,134 metric tons on June 1.

Abu Dhabi said it has given fellow emirate Dubai $10 billion in financing that will be used to pay part of the debt held by state-owned conglomerate Dubai World and its property unit Nakheel. The news boosted global stocks

In other metals, March silver rose 25 cents, or 1.5%, to $17.34 an ounce, January platinum gained $24.30, or 1.7%, to $1,447 an ounce, and March palladium added $6.15, or 1.7%, to $368.30 an ounce.

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