Crude oil climbed for a third day in New York after a government report showed U.S. oil stockpiles unexpectedly fell last week, and product demand climbed to the highest this year. Gold reached a 26-year high in May, partly as oil was heading to a record.
``We have seen gold move pretty closely with crude,'' Gerard Burg, economist at National Bank of Australia Ltd., said by phone from Melbourne. Gold could ``break $600 quite easily if there's a positive trend; maybe crude oil would lead it,'' he said. He was referring to $600, a level that the bullion failed to break past twice this month.
Gold for immediate delivery rose as much as $2.50, or 0.4 percent, to $593.55 an ounce. It traded at $592.05 at 9:38 a.m. Singapore time.
Some investors buy gold when energy expenses climb. Gold futures reached a record $873 an ounce in January 1980 when oil costs doubled in a year, sparking a surge in the inflation rate.
Crude oil for December delivery rose as much as 32 cents, or 0.5 percent, to $61.72 a barrel in after-hours electronic trading on the New York Mercantile Exchange, or Nymex. It traded at $61.64 at 9:38 a.m. Singapore time.
The Federal Reserve's decision yesterday to keep U.S. benchmark interest rate at 5.25 percent for a third month didn't play a major role in the gold market today, said Burg.
``I don't think there was a lot of surprise that the Fed didn't raise rates,'' he said.
The Fed's comments on inflation were also identical to the language in the prior month's statement: ``Some inflation risks remain.''
Gold futures for December delivery rose as much as $5.60, or 1 percent, to $596.40 an ounce on the Comex division of Nymex. It traded at $594.20 an ounce at 9:38 a.m. Singapore time.
