Gold hits a 1-month high on weaker dollar, silver and platinum follow

Gold extended positions through Monday and hit a new one-month high after disappointing U.S. economic news pressured further the dollar. Silver and platinum also touched highest levels in a month.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at $1 326.35 at 14:40 GMT, up 2.59% on the day. Prices held in range between a fresh one-month high at $1 328.25, which was hit minutes after the released data, and days low of $1 295.45 per ounce. The precious metal surged the past two days, bringing last week’s gain to 1.52% after advancing almost 6% during the preceding two.

Gold extended gains today as the dollar retreated further after the National Association of Realtors reported Existing Home Sales plunged to 5.08 million in June, mismatching projections for a 0.6% rise to 5.25 million. Meanwhile, Mays reading was revised downwards to 5.14 million from 5.18 million, further worsening the situation.

The dollar plunged following the release of the data, hitting a new days low. The dollar index, which tracks the greenbacks performance against six major peers, traded at 82.22 at 14:41 GMT, down 0.62% on the day. Minutes after the data was released, the September contract plunged to 82.13, the lowest since June 21. Days high stood at 82.74 during early European trading. The U.S. currency gauge slipped 0.2% on Friday, extending last week’s decline to 0.45% after falling 1.87% the preceding week.

The dollar trades inversely to dollar-priced commodities. Weakening of the currency makes dollar-denominated raw materials cheaper for foreign currency holders, boosting their appeal as an alternative investment.

Gold was supported last week as Fed Chairman Ben Bernanke reiterated his preceding week’s statement at his two-day testimony to Congress on Wednesday and Thursday. Bernanke reinforced Fed’s view that Quantitative Easing is still expected to be tapered within the year and brought to an end by mid-2014, if the requirements are fulfilled. However, the Fed chief stated the U.S. economy currently needs Fed’s accommodative monetary policy in the foreseeable future and it can even be accelerated, if recovery slows its pace.

Gold was also supported as rising oil prices in the U.S. are expected to boost the outlook for inflation while gold is used mainly as a hedging strategy against rising inflation. According to U.S. Commodity Futures Trading Commission data, speculators increased their net long position 56 percent to 55 535 futures and options as of July 16, the highest since June 4. According to a Bloomberg survey last week, traders remained bullish for a fourth week, the longest run since April. Out of twenty-nine analysts surveyed, fifteen were bullish, nine expected prices to fall this week and five were neutral.

Elsewhere on the market, silver and platinum gained, while palladium retreated. Silver outperformed other precious metals, marking a 4.59% advance by 14:42 GMT. The metal traded at $20.353 and ranged between days high of $20.403, the highest since June 20, and low at $19.508. Platinum October futures made a more moderate gain but still touched a days high at $1 453.80 an ounce, the highest since June 19. The October contract stood at $1 450.45 an ounce at 14:42 GMT, up 1.35% on the day. Meanwhile, palladium for September delivery still traded on the downside, standing at $748.70 an ounce, down 0.14%. The metal held in range between days high and low of $753.80 and $747.00 respectively.