Gold Gains On Weaker Dollar, Higher Oil

December 15, 2008 (RTTNews)

Gold prices turned higher on Monday morning, pushed by a weaker U.S. dollar. Gold for February delivery rallied to $829.70, up $9.20 for the session. The metal hit as high as $833.80.

The dollar dropped to an eight-week low versus the euro on Monday and also saw weakness against the Canadian loonie. Gold usually moves opposite the dollar because of the precious metal's hedge appeal.

Traders anticipated another interest rate cut by the Federal Reserve following the conclusion of a two-day meeting on Tuesday.. The Fed is widely expected to cut its key short-term interest rate by 50 basis points to 0.5%.

On the economic front, the New York Fed Index index fell to a negative 25.8 in December from a negative 25.4 in November, with a negative reading indicating a contraction in the sector. Economists had been expecting the index to fall to a reading of negative 27.0.

The price of gold gave back some of its gains from this week on Friday as traders sold assets for cash amid the U.S. auto industry turmoil. Gold for February delivery closed at $820.50, down $6.10 for the session.

Despite the drop, gold closed the week sharply higher. The precious metal added $68.30 from last Friday's close. The precious metal fell $67 last week, its first weekly decline in five weeks.

Oil prices gained on Monday morning and touched above the $50 a barrel mark. Light sweet crude for January delivery surged to $49.71, up $3.53 for the session. Oil hit as high as $50.05.

by RTT Staff Writer

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