Today gold rose as record oil prices stoked inflation jitters and as the dollar weakened slightly.Gold moves in line with high oil prices, as investors hedge against inflation, and trades in the opposite direction to the U.S. dollar as it is seen as an alternative asset.
Stronger oil prices pick up gold, as demand remains firm due to festivals in India, the world's largest consumer of gold jewellery.
India celebrates Akshaya Tritiya, a festival when many Hindus buy precious metals with the belief it will give them lasting prosperity on Wednesday and Thursday.
Seasonally strong physical demand should continue to provide a good base for gold in the coming sessions, and with oil prices setting fresh records investors may look to increase their gold holdings as a hedge against inflation. At 3:15 p.m., spot gold was trading at $880.70 per ounce against $860.00 in late New York trade on Monday. On Friday last week, gold hit $844.90, the lowest price since Jan. 2. Bargain hunting has helped gold's rally this week.
Looking ahead, the market will track any U.S. data to gauge whether recent calls that the world's biggest economy may avoid a recession are accurate. It is that belief, in part, that has strengthened the dollar and seen gold ease from a record $1,032.50 seen in March a drive up the price of Crude.
