Gold Advances Most in Eight Weeks on Demand for Haven; Platinum Rebounds
Aug. 12 (Bloomberg) -- Robert Cohen, manager of Goodman & Co.'s Dynamic Gold & Precious Metals Fund, talks with Bloomberg's Julie Hyman and Mark Crumpton about the outlook for gold prices and some of the fund's gold-stock holdings. (Source: Bloomberg)
Gold futures rose the most in eight weeks on demand for a store of value amid signs that the global economic recovery is slowing. Platinum climbed, snapping the longest slump since July 2008.
U.S. equities declined after American jobless claims unexpectedly jumped to a five-month high. The Federal Reserve on Aug. 10 said “the pace of economic recovery is likely to be more modest in the near term than had been anticipated” in the U.S. Gold reached a record $1,266.50 an ounce on June 21.
“We’re seeing safe-haven demand come into gold,” said Jim Steel, an analyst at HSBC Securities in New York. “Despite the fact that some of this is deflationary, people are interested in buying gold.”
Gold futures for December delivery gained $17.50, or 1.5 percent, to close at $1,216.70 at 1:44 p.m. on the Comex in New York, marking the biggest gain for a most-active contract since June 17. Earlier, the price reached $1,218.50, the highest level since July 13. The metal is up 11 percent this year.
European industrial production unexpectedly declined in June, a report showed today. China said this week that output grew at the slowest pace in 11 months.
“Concerns over a slowdown in the global economic recovery are still haunting the broader market with macro releases still fairly downbeat,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said in a report. More “carnage on the broader market” would give “a small boost to bullion,” he said.
Fed Stimulus
Prices also gained after the Fed this week reversed plans to exit from aggressive monetary stimulus and decided to keep bond holdings level to support the U.S. economic recovery, Steel of HSBC said.
The central bank also maintained a commitment to keep its benchmark interest rate close to zero percent for an “extended period.”
Gold prices may rally to $1,300 in six months, driven by record low borrowing costs and the prospect of renewed quantitative easing in the U.S., Goldman Sachs Group Inc. said yesterday in a report.
Assets in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, rose 3.04 metric tons to 1,285.79 tons yesterday.
Silver futures for September delivery rose 16.3 cents, or 0.9 percent, to $18.065 an ounce.
Platinum futures for October delivery climbed $11, or 0.7 percent, to $1,531.60 an ounce on the New York Mercantile Exchange, snapping a seven-session slump.
“There is concern over industrial demand for the metal, but emerging markets still remain strong,” Steel of HSBC said. “Platinum has good potential to move higher.”
Palladium futures for September delivery gained $6.35, or 1.4 percent, to $471.05 an ounce. The price dropped in the previous seven sessions, the longest slide since January.
Platinum and palladium are used in jewelry and pollution- control devices in cars.
This year, palladium has gained 15 percent, silver is up 7.2 percent and platinum has climbed 4.1 percent.
To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Millie Munshi in New York at mmunshi@bloomberg.net.
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