Weaker dollar drives gold higher for 2nd day

AP News
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Posted: Dec 24, 2009 3:22 PM

Gold prices inched higher for a second day in a row, boosted by a weaker dollar.

Gold for February delivery rose $10.80 to settle at $1,104.80 an ounce in quiet, holiday-shortened trading on the New York Mercantile Exchange Thursday. Commodities markets closed early ahead of the Christmas holiday and will remain closed on Friday.

The modest gain in gold came as the ICE Futures U.S. dollar index dipped 0.1 percent. Gold, which is considered a hedge against a weak greenback, tends to rise when the dollar falls.

The dollar's sway over gold prices has been exceptionally strong this year. Gold prices had been on a record-setting climb over the past several months as the Federal Reserve's low-interest rate policy sent the dollar tumbling. The dollar has steadied since early December, however, causing gold to drop about $123, or 10 percent, from a record high of $1,227.50 on Dec. 3.

Analysts say the recent pullback was an orderly reaction after such a big jump. Gold is still up about 25 percent for the year.

Other metals followed gold higher. March silver jumped 25 cents to $17.44 an ounce, while January platinum rallied $41.10 to $1,467.90 an ounce. Palladium surged $32.30 to $389.65 an ounce.

Among industrial metals, March copper futures rose 8.9 cents to $3.2925 a pound, after earlier hitting a 15-month high of $3.304.

Oil prices rose nearly 2 percent, or $1.38, to settle at $78.05. Crude rose 5 percent this week on the weaker dollar, winter storms and diminishing supplies.

In other Nymex trading, heating oil rose 2.38 cents to $2.0356 a gallon, while gasoline rose 2.3 cents to $1.9896 a gallon.

On the Chicago Board of Trade, March wheat futures slipped 4.5 cents to $5.245 a bushel, while corn for March delivery added 3.75 cents to $4.085 a bushel.

March soybeans gave up a penny to $10.08 a bushel.

Cocoa and sugar rose, while cotton and coffee prices fell.