Gold Rises as Dollar Drop Boosts Alternative-Investment Demand

NEW YORK (Bloomberg News) -

Gold futures gained Thursday for the second time in three days as the dollar’s decline increased demand for the precious metal as an alternative investment.

The greenback slipped as much as 0.6 percent against a basket of major currencies. Cyprus denied that it plans to sell gold to ease its debt crisis. Wednesday, futures tumbled 1.8 percent, the most since November, after a draft of a European Commission report obtained by Bloomberg News showed that Cypriot authorities planned to sell reserves of the metal.

“A weaker dollar is supporting gold,” Adam Klopfenstein, a senior market strategist at Archer Financial Services, Inc. in Chicago, said in a telephone interview. “The Cyprus denial is helpful, and we are definitely seeing some demand as prices have fallen sharply.”

Gold futures for June delivery rose 0.4 percent to settle at $1,564.90 an ounce at 1:40 p.m. on the Comex in New York. Earlier, the price fell as much as 0.4 percent after U.S. jobless claims dropped more than forecast by analysts, easing pressure on policymakers to increase stimulus to boost the economy.

Several Federal Reserve officials said the central bank should begin scaling back debt purchases later this year, according to the minutes of their March meeting, released Wednesday.

Silver futures for May delivery gained 0.2 percent to $27.697 an ounce on the Comex. The price has declined 8.4 percent this year, while gold dropped 6.6 percent.

On the New York Mercantile Exchange, platinum futures for July delivery advanced 0.4 percent to $1,535.80 an ounce.

Palladium futures for June delivery jumped 1.7 percent to $733.35 an ounce, the biggest gain for a most-active contract since April 1. On Wednesday, the metal touched $704, the lowest since Jan. 15.