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Gold rallies above $950 Add to ...

Gold futures rallied above $950 (U.S.) an ounce Monday, reaching the highest level in more than a month, as a sharp dollar decline and better U.S. corporate earnings boosted bullion's inflation-hedge appeal.

Commodities in general benefited from a sharper appetite for risk, dealers said, with world stocks rallying as investors were tempted back into higher-yielding assets.

A brighter outlook for the financial sector amid economic optimism has underpinned the gold market this week. The metal, viewed as an inflation hedge, has been weighed down by the prospect of deflation, or a downward spiral in prices.

"You are starting to see the precious metals taking the lead on the positive rebound of the better-than-expected earnings coming out of the U.S. stock market, and the anticipation of reflation," Frank McGhee, head precious metals trader at Integrated brokerage Services LLC in Chicago.

U.S. August futures settled up $11.30, or 1.2 per cent, at $948.80 an ounce on the Comex division of the New York Mercantile Exchange. The August contract hit a session peak of $955.40, which marked the loftiest level since June 12.

Spot gold traded at $949.50 an ounce at 2:33 p.m. ET, against $936.50 in its previous session finish.

Prominent independent investor Dennis Gartman said on Monday he is now a buyer in the gold market because of bullion's technical strength and its status as a hedge against the U.S. dollar.

The dollar slid to a six-week low against the euro as rising stock markets boosted appetite for higher-yielding currencies seen as riskier.

Other commodities also benefited from stronger risk appetite, with oil climbing toward $65 a barrel and copper rising to its highest level since October.

"It's a combination of several factors - dollar weakness, the strength of the oil price," said Eugen Weinberg, analyst at Commerzbank.

Gold priced in euros rose to a three-week high of €671.24 ($955.13) an ounce, while sterling-priced gold reached a peak of £578.78 ($957.68), its highest since June 11.

"Appetite for commodities [is]coming back with the hope of an economic recovery," said Alexander Zumpfe, a trader at precious metals house Heraeus.

Analysts say the euro's break up through $1.42 may fuel further gains in the gold price.

Bullion, like all dollar-priced commodities, becomes cheaper for holders of other currencies as the U.S. unit weakens.

Demand for physical gold, however, remained lacklustre, with the main bullion-backed exchange-traded fund, the SPDR Gold Trust, reporting a 0.31-tonne outflow on Friday. The fund said its gold holdings dropped more than 15 tonnes last week.

Among other precious metals, silver tracked gold higher, rising nearly 2 per cent to $13.62 an ounce from $13.39. Platinum was at $1,182 an ounce against $1,171, while palladium was at $252 against $246.

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