29/05/07 - Gold rises as dollar declines

The price of gold rose today (May 29th) as the dollar declined against the euro, AFX reports.

This made it cheaper for those not buying with the US currency, spurring demand, and the spot price of the precious metal reached $660.20 at 2pm. The price was up from $655.50 yesterday.

However, weak performance in the crude oil market kept gains lower than they would otherwise have been. Gold prices tend to go hand-in-hand with oil.

The gold spurt was "mostly, if not entirely, on the dollar's decline", according to James Steel, an analyst at HSBC. He said there were some indications of "improving physical demand with lower prices".

Before today gold had been declining steadily since a high of $690 in May. Trading in the precious metal markets tends to be more subdued with the approach of the holiday season.

Immediate factors that have helped lower prices include large sales of gold from European central banks in recent months, competition from re-invigorated markets and slackening demand from India as that country's wedding season comes to an end.