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Gold Trades Near 2-1/2 Month High Over Concerns In Asia

Gold traded near a 2 month high as geopolitical tension in the Middle East...

Gold traded near a 2-1/2 month high as geopolitical tension in the Middle East and rising oil prices spurred investor demand for bullion as a haven.

Gold tends to gain alongside oil as demand for a hedge against accelerating consumer price rises. Oil gained for a second day after the International Energy Agency said supplies may not keep up with demand through 2013, and on speculation that Israel could take military action against Iran.

Bullion for immediate delivery was at $939.80 an ounce at 10:37 a.m. in Singapore, after reaching $946.08 yesterday, the highest since April 18. Silver for immediate delivery fell 0.2 percent to $18.09 an ounce.

Crude oil for August delivery rose as much as $1.48, or 1.1 percent, to $142.45 a barrel in after-hours electronic trading on the New York Mercantile Exchange.

Aiding gold's rally was the declining dollar, which traded near a three-week low against the euro and yen ahead of U.S. job market reports this week. The currency stood at $1.5801 against the euro, compared with $1.5793 late yesterday in New York, and was at 106 yen from 106.13 yen.

Heightened financial market stress, evidenced by widening credit spreads, declines in high yield exchange-traded funds and a rise in credit default insurance, also increase investor risk- averse behavior and supported gold demand, according to Steel.

Gold for August delivery was down 0.4 percent at $941.10 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange at 10:42 a.m. Singapore time.

Gold for June delivery on the Tokyo Commodity Exchange added 37 yen to 3,230 yen a gram ($948 an ounce) at the 11 a.m. local time break.