Nov. 19 (Bloomberg) -- Gold gained for a second day in New York as a weaker dollar and concern about unrest in the Middle East spurred demand for the metal as an alternative investment.
The U.S. Dollar Index, a measure against six major trading partners, fell amid prospects U.S. lawmakers will reach an agreement on the nation’s budget and avert the so-called fiscal cliff, a collection of automatic spending cuts and tax increases scheduled to occur at year-end. Israel’s Defense Minister Ehud Barak said the army was prepared to invade the Gaza Strip for the first time in almost four years.
“This was primarily in response to a weaker dollar, which in turn was due to ‘constructive’ talks in Congress about resolving the fiscal cliff,” David Govett, head of precious metals at Marex Spectron Group in London, said in a report today, referring to gold’s gain. “The situation in the Middle East continues with Israel continuing its targeting of Gaza and this in turn has also led to some buying.”
Gold for December delivery rose 0.5 percent to $1,723.90 an ounce by 7:54 a.m. on the Comex in New York. Bullion for immediate delivery gained 0.6 percent to $1,724.05 in London.
Holdings in gold-backed exchange-traded products rose 4 metric tons to a record 2,603.7 tons on Nov. 16, data compiled by Bloomberg show. Assets and prices gained this year as central banks from the U.S. to Asia took steps to bolster economies.
Hedge funds increased bets on rising gold prices for the first time in five weeks, U.S. Commodity Futures Trading Commission data show. They raised their net-long position by 7.7 percent to 140,162 futures and options in the week to Nov. 13.
The escalating conflict between Israel and the Islamist Hamas movement, which controls the Gaza Strip, threatens a region still unbalanced after a wave of popular uprisings last year.
Silver for December delivery rose 0.9 percent to $32.655 an ounce. Platinum for January delivery was little changed at $1,563.20 an ounce. Palladium for December delivery was 1.1 percent higher at $633.65 an ounce.