Gold Prices Rise for First Day in Three on Higher Energy Prices

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(Bloomberg) -- Gold rose for the first day in three after crude oil prices climbed to the highest in three months, boosting bullion's appeal as an inflation hedge.

Gold often moves in line with oil prices as some investors buy bullion to preserve the value of assets at times of inflation. Crude oil rose as much as 0.8 percent to $62.79 a barrel today on concern Iran's capture of 15 British naval personnel will heighten tensions in the Middle East, source of a third of the world's oil.

``Gold may trend a little higher with stronger oil prices,'' said Cai Zhenwei, a Bank of China Ltd. Shanghai-based trader.

Gold for immediate delivery rose as much as $2.60, or 0.4 percent, to $660.00 an ounce today, and traded at $658.70 at 3:17 p.m. Shanghai time.

Britain considers Iran's seizure of a group of sailors and marines in the Persian Gulf a ``very serious situation,'' Prime Minister Tony Blair said yesterday. Iran, the world's fourth- largest oil producer, says the U.K. forces entered its territorial waters illegally.

Gold may rise for a fourth straight week, a Bloomberg News survey showed, amid speculation the Federal Reserve won't raise interest rates, weakening the dollar and boosting the appeal of the precious metal as an alternative investment.

Seventeen of the 29 traders, investors and analysts surveyed by Bloomberg News from Sydney to Chicago on March 22 and March 23 advised buying gold. Four respondents said to sell, and eight were neutral.

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Fed policy makers kept rates unchanged at 5.25 percent on March 21 and dropped a reference to ``additional firming'' in their statement.

Gold futures for April delivery rose $1.60, or 0.2 percent, to $658.90 an ounce on the Comex division of the New York Mercantile Exchange at 3:23 p.m. Shanghai time, after gaining 0.5 percent last week.

Dennis Gartman, economist and editor of the Gartman Letter, said he is ``bullish'' on gold in an interview today.

Still, hedge-fund managers and other large speculators decreased their net-long position in New York gold futures in the week ended March 20, according to U.S. Commodity Futures Trading Commission data.

Gold often moves in the opposite direction of the dollar, which rose to trade at a one-week high against the euro on speculation a U.S. government report will show a rebound in new home sales in February.

Sales probably rose 5.7 percent to an annual rate of 990,000, according to the median of 53 economists' forecasts in a Bloomberg News survey. The home sales figures scheduled for release today may influence the Federal Reserve's decision on interest rates.

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