NEWYORK, Jan. 26 -- Gold prices rebounded on speculation that the dollar will retreat, boosting the appeal of the precious metal as an alternative investment.
The greenback has been little changed against a basket of six major currencies since reaching a five-month high on Jan. 21. Gold is up 21 percent in the past year, while the dollar dropped 8.7 percent.
"The dollar is giving traders a green light to buy gold," said Frank Lesh, a trader at FuturePath Trading LLC in Chicago. "The market is going to be range-bound until we get more clarity on interest rates and the direction of the dollar."
Gold futures for February delivery rose $6, or 0.6 percent, to $1,095.70 an ounce on the Comex division of the New York Mercantile Exchange. On Jan. 22, the metal touched $1,081.90, the lowest level since Dec. 23.
In 2009, gold rallied for a ninth straight year as the Federal Reserve kept interest rates close to zero percent to revive growth, driving the dollar lower.
Last week, gold dropped 3.6 percent, the most in six weeks. The slide may encourage some investors to buy, especially in China, James Moore, an analyst at London-based TheBullionDesk.com, said in a report.
"With rising physical demand ahead of the Lunar New Year, dips are likely to be viewed as good bargain-hunting opportunities," Moore said. China's weeklong Lunar New Year holidays start on Feb. 14.
Silver futures for March delivery rose 21.3 cents, or 1.3 percent, to $17.145 an ounce on the Comex. Platinum futures for April delivery rose $1.60, or 0.1 percent, to $1,546.10 an ounce in New York. Palladium futures for March delivery fell 10 cents to $440 an ounce.