Gold, Silver Futures Rise on Speculation Dollar to Weaken

July 9 (Bloomberg) -- Gold and silver rose in New York on speculation a decline in the value of the dollar will boost demand for precious metals as alternative investments.
Gold generally moves in the opposite direction of the U.S. dollar, which has fallen 1.7 percent in the past three weeks against a basket of six major currencies. Gold is up 3.8 percent this year while the dollar index has fallen 2.6 percent.
``The dollar is trending down and that's why gold is looking good,'' said Walter Otstott, senior broker at Dallas Commodity Co. in Dallas.
Gold futures for August delivery rose $7.70, or 1.2 percent, to $662.50 an ounce on the Comex division of the New York Mercantile Exchange. The metal rose 0.6 percent last week, the first gain in three.
Silver futures for September delivery rose 6.3 cents, or 0.5 percent, to $12.82 an ounce on the Comex. The metal is still down 0.9 percent this year.
Speculation the U.S. Federal Reserve will keep rates unchanged this year while other countries raise their overnight lending rates helped to weaken the dollar's prospects and make gold more attractive, analysts said.
Buying Trigger
``If the Fed is expected to keep interest rates unchanged, that could trigger some new buying for gold,'' said Nick Ruggiero, a trader at Eagle Futures Inc. in New York.
The Fed has kept its benchmark rate unchanged at 5.25 percent since June 2006. The Bank of England last week raised its key lending rate to 5.75 percent, the third increase this year. The European Central Bank raised its benchmark rate in June to 4 percent, the second increase this year.
Five of the past bear markets for the U.S. dollar have resulted in a higher gold price. The euro reached a record $1.3681 on April 27, a week after gold rose to this year's high of $698. The euro traded as high as $1.3638 today.