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Gold Prices Gain to Two-Month-High as Dollar's Drop Spur Investor Demand
Gold advanced to the highest price in more than two months in New York and London as investors increased purchases of the metal as a protection of wealth and the dollar retreated.
Gold holdings through 10 exchange-traded products tracked by Bloomberg advanced to a record 2,079.48 metric tons. Holdings rose by almost 4.5 tons yesterday, the most since Aug. 18, exceeding the previous record of 2,078.05 tons set July 19, data compiled by Bloomberg show.
The metal’s price gain was “bolstered by further safe- haven related bids,” James Moore, an analyst at TheBullionDesk.com in London, wrote in a daily report.
December-delivery futures rose 0.4 percent to $1,255.40 an ounce on the Comex in New York as of 7:58 a.m. local time. The contract gained as much as 0.5 percent to $1,256.60, the highest intraday price since June 28. Bullion for immediately delivery jumped as much as 0.6 percent to $1,254.28 an ounce, also the highest intraday level since June 28.
Immediate-delivery gold jumped 5.6 percent in August, the biggest monthly advance since April, as equities dropped on concerns that the economic recovery was sputtering, boosting demand for the precious metal as a means to shield wealth. The MSCI World Index of equities fell 3.9 percent last month. Gold futures have risen 15 percent this year, reaching a record $1,266.50 on June 21.
Gold for immediate delivery rose to 815.4985 British pounds an ounce, the highest compared with intraday prices since July 1. The most widely held option on gold futures traded in New York is for $1,500 an ounce by December, or 18 percent more than the record.
The metal rose to $1,250 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,246 at yesterday’s afternoon fixing.
$1,500 ‘Very Real’
Gold’s chances of rising above $1,500 an ounce are “very real” and prices may go even higher, Petropavlovsk Plc Chairman Peter Hambro said. The metal is “wealth insurance,” Hambro said on Bloomberg Television’s “On the Move” with Francine Lacqua.
Analysts raised their 2011 gold forecasts more than for any other precious metal in the past two months, data compiled by Bloomberg show. Gold may rise to as high as $1,500 next year, according to the median in a Bloomberg survey of 29 analysts, traders and investors.
The International Monetary Fund’s gold reserves fell by 16.85 tons in July as Russia added 16.2 tons to its holdings, according to figures from the Washington-based lender. Reserves of gold at the IMF were 2,917.07 tons at the end of July, data on the IMF’s website show.
Dollar Slides
Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, increased 3.95 metric tons to 1,302.51 tons yesterday, according to figures on the company’s website. Holdings touched a record 1,320.44 tons in June.
The U.S. Dollar Index, a six-currency gauge of the greenback’s strength, fell today as much as 0.9 percent, the first decline in three days. Gold often moves in the opposite direction to the dollar.
“Bullion extended gains on the dollar’s weakness,” Shuji Sugata, a research manager at Mitsubishi Corp. Futures Ltd. in Tokyo, said by phone today.
Silver for December delivery added 0.3 percent to $19.480 an ounce, October-delivery platinum rose 1 percent to $1,538.10 an ounce on the New York Mercantile Exchange and palladium futures for December delivery gained as much as 3 percent to $517.25 an ounce, the highest price since Aug. 2.
Palladium Buoyed
Palladium has strong supply and demand fundamentals, David Wilson, an analyst at Societe Generale in London said today in an e-mailed reply to questions. Prices were also buoyed by expanding manufacturing in China, Wilson said. Palladium is mostly used in autocatalysts.
China’s auto sales rose 48 percent to 13 million vehicles in 2009, surpassing the U.S. to become the world’s biggest market, according to Moody’s Investors Service.
China’s purchasing managers’ index rose to 51.7 in August, from 51.2, exceeding forecasts, a government-backed report showed today.
To contact the reporters on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net.
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