Sunday, October 14, 2007

Gold May Rally, Top 27-Year High, on Demand for Inflation Hedge

(Bloomberg) -- Gold may rise for a second straight week, topping a 27-year high, on speculation that a weaker dollar and higher crude-oil prices will boost the appeal of the precious metal as a hedge against inflation.

Twenty-three of 28 traders, investors and analysts surveyed by Bloomberg from Sydney to Chicago on Oct. 11 and Oct. 12 advised buying gold, which rose 0.9 percent last week to $753.80 an ounce in New York. Three said to sell, and two were neutral.

Gold is up 18 percent this year, heading for a seventh straight annual gain. On Oct. 11, the metal reached $759.30, the highest since Jan. 20, 1980. The dollar touched an all-time low against the euro Oct. 1, and oil climbed to a record Oct. 12.

A majority of analysts surveyed Oct. 4 and Oct. 5 anticipated last week's gain. The survey has accurately forecast the direction of prices in 111 of 181 weeks, or 61 percent.

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