Gold traded near a record in New York as investors sought an alternative to equities and a protection of wealth on concern the economic recovery is stalling. Silver gained to the highest level since March 2008.
The euro was little changed against the dollar as traders increased bets the Federal Reserve will keep interest rates near zero, while the yen was near a 15-year high against the greenback on speculation a business survey will add to evidence the U.S. economic recovery is stalling. Gold futures are 0.3 percent from a record and had the highest ever close yesterday. Global equities yesterday fell the most in two weeks.
“Gold is acting like a safe haven,” said Narayan Gopalakrishnan, a Geneva-based trader at bullion refiner MKS Finance SA. “People are just trying to put money into gold instead of equities and currencies. Once the record is taken out we should inch higher toward $1,300 an ounce.”
Gold futures for December delivery added as much as $3.70, or 0.3 percent, to $1,263 an ounce on the Comex in New York, the highest price since June 28. The metal traded at $1,262.40 at 8:11 a.m. local time and yesterday closed at a record $1,259.30. Bullion for immediate delivery in London was 0.4 percent higher at $1,260.
Bullion has jumped 15 percent this year and is set for a 10th annual gain as investors seek protection against financial turmoil in Europe and the prospect of slowing economic growth. Futures reached a record $1,266.50 an ounce on June 21.
UBS Raises Forecasts
The metal rose to $1,258 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,256.75 at yesterday’s afternoon fixing. UBS AG today raised its one- and three-month gold forecasts to $1,300, from $1,230 and $1,200 respectively.
The metal climbed to 995.0499 euros an ounce today, the highest price since July 1, and gold priced in British pounds yesterday also reached a nine-week high, Bloomberg data showed.
Price gains in other currencies show bullion “is increasingly trading as a currency rather than a commodity,” analysts at Dublin-based broker GoldCore Ltd. said in a report. Gold’s rally may continue on increasing physical demand in Asia, which “is especially the case in India as we enter the festival season,” the analysts said.
The Fed is due today to release its survey of conditions in its 12 districts, known as the Beige Book, before officials meet to review monetary policy on Sept. 21. The jobless rate in the U.S. is likely to approach 10 percent in coming months as the economy fails to grow enough to employ people rejoining the labor force, economists said.
‘Buying Safety’
Gold has gained this year as inflation has slowed. In the 12 months ended in July, U.S. consumer prices rose 1.2 percent, compared with a 2.7 percent year-over-year gain in December. Gold gained 28 percent in the three months ended January 2009 as year-over-year U.S. consumer price increases slowed to zero from 3.7 percent.
“Inflation is easy to fight, but the Fed cannot do anything to fight deflation,” said Leonard Kaplan, president of Prospector Asset Management in Evanston, Illinois. “People are worried. People are buying safety. Gold is going higher.”
German exports fell in July for the first time in three months, the Federal Statistics Office said today, adding to evidence that Europe’s largest economy may lose momentum as the global economy cools.
Gold is “within a stone’s throw of the June record” as a stall in equities boosts demand, said Shuji Sugata, a research manager at Mitsubishi Corp. Futures Ltd. in Tokyo. The MSCI World Index of shares was little changed today. Bullion was also supported by a Wall Street Journal report that stoked concern over European economic growth, Sugata said.
Stress Tests
European stress tests on lenders understated some banks’ holdings of potentially risky debt, the Wall Street Journal reported this week, citing its own analysis. The Association of German Banks said Sept. 6 that the country’s 10 largest banks may need fresh capital to meet new regulations.
Global holdings of gold by exchange-traded products rose 3.67 metric tons to 2,077.23 tons yesterday, according to Bloomberg data from 10 providers. Holdings reached a record 2,081.38 tons on Sept. 1.
CNBC’s “Mad Money” host Jim Cramer yesterday recommended the purchase of silver on a “bullish” outlook for metal prices. Silver may outpace the price-advance of gold, and is rising on demand from emerging markets and higher sales of electronics, for which silver is used in components, he said.
Silver for immediate delivery in London gained as much as 1.3 percent to $20.0475 an ounce, the highest price since March 2008, and last traded at $20.03. Platinum added 0.3 percent to $1,560.75 an ounce. Palladium rose 1.1 percent to $526.50 an ounce.
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Source: http://www.investorplace.com/stock-picks/ways-invest-next-gold-rush.html
