Gold remains stable

Gold in Asia remained stable following concerns that a gain in the dollar could reduce the appeal of the metal as hedge against US currency.

Gold often moves in the opposite direction compared to the dollar. The precious metal has gained 2.8 per cent so far this year, while the dollar has fallen by 3.2 per cent against the euro.

Although the dollar briefly rose against the euro prompting speculation of a fall in gold, it quickly stalled and gold extended gains. Spot gold rose to $654.20 an ounce from $653.80 late on Friday, when it rose by more than $4 an ounce.

The euro closed in on its strongest ever level against the dollar on Monday and reached a record level against the yen, as investors flock to the currency expecting euro zone interest rates to continue rising.

It is expected that gold may rise for the second straight week due to speculation that a ten month high in crude-oil prices will boost demand for the precious metal as an inflation hedge. Sixteen of 31 traders and analysts surveyed by Bloomberg advised investors to buy gold, while 11 said to sell.