Gold futures climbed above $920 an ounce Tuesday to tally a gain of more than 6% during a four-session winning streak as a decline in the U.S. dollar and rising oil prices enhanced the metal’s appeal as an investment hedge.

“Capital seeking shelter from monetary debasement will continue to deviate to preservation assets such as gold and silver,” said Peter Spina, an analyst at GoldSeek.com.

Gold prices closed at their strongest level in a month.

“As oil nears $130, the historical relative value of gold to oil is now again at extreme lows,” said Spina, in emailed comments. “This measurement, among with others, places the true value of gold much higher than we are seeing it presently trade at.”

And with today’s very weak U.S. dollar and continual prospects of additional expansion of the money supply, “gold becomes even that more attractive at this present time,” he said.

Gold for June delivery climbed as high as $923 an ounce on the New York Mercantile Exchange, a level not seen since April 22. It closed up $14.40, or 1.6%, at $920.20.

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With financial markets still reeling from the global credit squeeze, and growing inflationary pressures dollar demand for gold reached US $20.9bn in the first quarter of 2008, a 20% increase over the same period in 2007 and more than double the level of four years earlier.

However, tonnage demand for gold at 701 tonnes was down 16% on the same period last year and represents the lowest quarterly figure for five years, according to Gold Demand Trends, which is released today by World Gold Council (WGC). This fall was caused primarily by the sharp rise and unusually high volatility in the gold price, which briefly touched record levels above $1,000/oz in mid-March.

The data, compiled independently for WGC by GFMS Ltd, show that the impact of these factors hit home particularly hard in the “physical buying” markets of gold jewellery and coins and bars. Jewellery demand declined 21% year-on-year to 445.4 tonnes, the lowest quarterly level since the early 1990s. Net retail investment demand dropped by 35% to 72.7 tonnes in Q1.

There was a stark contrast in the gold exchange traded fund (ETF) market, however, where a combination of continuing instability in the equities markets, ongoing fears over the dollar and rising inflation, and increased understanding of gold’s investment attributes helped spur demand. Demand for gold ETFs was up 100% on Q1 2007 at 73 tonnes for the quarter - representing $2.2 billion in dollar terms.

Positive news also came from two of the world’s biggest emerging economies with overall demand for gold in China and Russia up 15% and 9% respectively on the same period last year, driven by increasing consumer wealth and ease of access to attractive jewellery and retail investment products. (more…)

Gold futures closed near $900 an ounce Friday, marking their highest level in more than three weeks, as crude oil’s rally to a fresh record high near $128 a barrel boosted the precious metal’s appeal as an inflation hedge.

“Ever since gold became free trading in the early 70s, we’ve been telling you, ‘Buy it as an inflation hedge,’” said Peter Grandich, editor of the Grandich Letter. “Everywhere one looks they see prices and costs rising,” he said in emailed comments. And “as the inflation concerns grow, so should the price of gold.”

Gold for June delivery climbed to an intraday high of $904.50 on the New York Mercantile Exchange. It closed with a gain of $19.90, or 2.3%, at $899.90, a level it hasn’t finished at since April 23.

“Safe-haven buying is likely to have reemerged on both the surging oil price but also on the appalling consumer sentiment numbers which showed consumer confidence falling to their lowest levels since 1980 — 28 years ago,” said Mark O’Byrne, director at Gold & Silver Investments Ltd., in emailed comments.

The dollar extended losses Friday, despite better-than-expected housing data, after a weak consumer sentiment index reading kept alive doubts about the strength of the U.S. economy.

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Last Minute Amendment Could Have Shut Down Precious Metals Coin Dealers

ICTA (INDUSTRY COUNCIL FOR TANGIBLE ASSETS) recently helped defeat an 11th hour proposal that would have put precious metals dealers under the jurisdiction of the CFTC which may also have led to federal licensing and further regulation of the industry.

In late April, during Senate consideration of the 2008 farm bill (HR 2419), a section was added to reauthorize the Commodity Futures Trading Commission (CFTC) and amend the Commodity Exchange Act (CEA). The House Agriculture Committee marked up similar legislation, so the two CFTC bills were both being considered by the joint Senate/House Conference Committee that would recommend the final bill.

A last minute amendment was introduced at the Conference Committee by Senator Tom Harkin (D-IA) that would have expanded the CFTC’s jurisdiction beyond the futures markets to include the cash markets.

Had this amendment been accepted, it could have radically changed the manner in which the rare coin/precious metals market functions. In addition, the proposed CFTC jurisdiction could have led the way for CFTC licensing and trading restriction requirements would have affected almost every dealer who sells precious metals including not just bars but certain coins as well.

ICTA worked with lobbyists for the Coalition for Equitable Regulation & Taxation (CERT) and others to inform the Conference Committee legislators of the disastrous impact that this amendment would have on the precious metals industry, including creating an unnecessary second layer of oversight by yet another governmental agency (the CFTC), since cash markets are currently overseen by the Federal Trade Commission (FTC). (more…)