Gold futures gained 2.4 percent this week amid speculation that the rising cost of energy will help spur inflation in the U.S., boosting the appeal of bullion. Crude-oil futures reached a two-week high amid concern supplies may be disrupted by violence in Iraq and a strike in Norway. Some investors buy gold in times of inflation, which erodes the value of fixed-income assets, such as bonds. ``The strength in oil has been boosting gold for the inflation reason,ââ said Carlos Perez-Santalla, president of Hudson River Futures in New York.
Gold for August delivery rose $6.20, or 1.6 percent, to $395.70 an ounce on the Comex division of the New York Mercantile Exchange, the highest close in three weeks. The weekly gain was the first this month. Oil surged 3.1 percent yesterday on concern that unrest will reduce shipments from the Middle East as sabotage to pipelines halted Iraqi exports from two Persian Gulf terminals. Oil reached a record $42.45 a barrel on June 2. Crude for August delivery gained 22 cents to $39.03 on the Nymex after reaching $39.19. The U.S. producer-price index rose 0.8 percent in May, the most in a year, boosted by higher costs for food, energy and automobiles, the Labor Department said yesterday. Prices increased 5 percent from May 2003, the biggest gain since December 1990.
Gold also rose as the dollar fell against major currencies, boosting demand for the metal as an alternative investment and making the metal, traded in U.S. dollars, cheaper for investors with the euro and yen. A drop in the dollar to a record against the euro in March helped boost gold futures to a 15-year high of $433 an ounce on April 1. The New York Stock Exchange, the worldâs biggest equity market, is seeking approval to list gold-linked shares sponsored by the World Gold Council, a producer group. The New York-based exchange proposed rule changes yesterday in a notice to the U.S. Federal Register. The amendments may take effect in as early as 35 days. The gold council, based in London, has been trying since May 2003 to get approval from the U.S. Securities and Exchange Commission to sell as many as 60.4 million shares in the Equity Gold Trust for trading on the Big Board. The Bank of New York will serve as trustee, HSBC Bank USA will be custodian and UBS Securities LLC will be the initial purchaser of the shares, the exchange said in the notice. Regulators are seeking comment on the proposed rule change until July 8. ``The shares will make it easier for people to buy gold,ââ Hudson River Futuresâ Perez-Santalla said.
Gold Bullion Securities Ltd. has listed shares on the Australian Stock Exchange and the London Stock Exchange. Shares have been sold equal to 1.58 million ounces of gold, worth $627 million, according to the Gold Bullion Securities Web site. Gold Bullion shares rose 91 cents, or 2.4 percent, to $39.59 on the London Stock Exchange. 
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