Gold Stays Above $900 After Late Retreat

Gold futures hit their highest level in more than a week, with initial weakness in the dollar and inflation expectations helping to lift prices.

Lightly traded gold for May delivery rose $2.10, or 0.2%, to $903.70 a troy ounce on the Comex division of the New York Mercantile Exchange, while most-active June rose $2.10 to $904.30.

Gold gave up more than $10 of its early gain on what Craig Ross, vice president with ApexFutures.com, described as late-day profit-taking. Lind-Waldock senior market strategist Daniel Pavilonis also pointed to a recovery in the dollar from several-week lows.

Earlier in the session, June gold hit its highest level since April 27. "The dollar is probably the prime reason," said Bart Melek, global commodity strategist with BMO Capital Markets.

Early in the session, the euro hit its strongest level against the dollar since April 6. But the greenback later recovered.

Jon Nadler, analyst with Kitco Bullion Dealers, tied some of gold's early gains to apprehension ahead of the planned Thursday release of stress-test results for big U.S. banks.

Analysts also cited anticipation of inflation, particularly due to improving U.S. economic data and the stock-market rally since early March. Any rising price pressures as the economy recovers may be exacerbated by government stimulus and central-bank monetary-policy moves to revive the economy, analysts said.

"When there is that much money out there, it has to cause inflation at some point," Mr. Pavilonis said.

Gold's ability to hold up as stocks rise may be due to inflation worries, some observers said. BMO's Mr. Melek said there hasn't been heavy liquidation of gold exchange-traded funds. As of Monday, SPDR Gold Shares reported holdings of 1,104.45 metric tons, higher than when the Dow industrials hit a 12-year closing low on March 9.

"Inflation isn't going to be here for at least another year, but markets are thinking about it," Mr. Melek said.