Gold Rises as Dollar Extends Drop; Silver Reaches 13-Month High

Gold rose in London and New York, heading for a fourth consecutive weekly advance, as a weaker dollar and speculation inflation may accelerate spurred demand for the metal as a hedge. Silver climbed to a 13-month high.

The Dollar Index, a six-currency gauge of the greenback’s value, has dropped for six consecutive days and to its lowest level in almost a year. U.S. consumer prices will drop 1.6 percent this quarter compared with the same period last year before rising 1.4 percent in the fourth quarter and 2 percent in each of the subsequent two quarters, according to the median estimate of economists surveyed by Bloomberg News.

Gold’s gains may continue “given concerns over rising inflation and our expectations for the dollar to weaken further,” Suki Cooper, an analyst at Barclays Capital, wrote in a report today. The bank expects prices to average $940 an ounce this year and $970 next year.

Gold futures for December delivery climbed $6, or 0.6 percent, to $1,002.80 an ounce at 8:22 a.m. on the Comex division of the New York Mercantile Exchange, bringing this week’s gain to 0.6 percent. Prices jumped 5.1 percent the previous three weeks. Metal for immediate delivery rose $4.05, or 0.4 percent, to $1,000.65 an ounce.

December silver futures rose as much as 1.8 percent to $16.97 an ounce, the highest since Aug. 5, 2008. Manufacturing demand for silver, including electronics and other industrial applications, photographic film, jewelry and silverware, will rise 0.2 percent next year, the first increase in three years, according to Barclays.

‘Positive Investment Demand’

“Silver has benefited from positive investment demand and a potential recovery in industrial demand” on signs of economic growth, Barclays said in today’s report.