Gold Trades Near a Record in New York on Demand for Protector of Wealth
Sept. 9 (Bloomberg) -- Tom Kendall, vice president of commodities research at Credit Suisse, discusses the outlook for gold. Kendall talks with Deirdre Bolton on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
Gold was little changed in New York, trading near a record, as concern the economic recovery is sputtering spurred demand for the metal to protect wealth. Silver futures fluctuated after yesterday reaching the highest price since March 2008.
The euro declined against the dollar on speculation European banks will struggle to raise funds amid signs the region’s recovery is stalling. The Federal Reserve yesterday said the American economy showed widespread signs of slowing. Gold futures on the Comex in New York were 0.6 percent below a record $1,266.50 an ounce reached on June 21.
“Safe-haven demand remains elevated,” Suki Cooper, an analyst at Barclays Capital in London, wrote today in a report.
Gold for December delivery was $1, or 0.1 percent higher at $1,258.50 on the Comex as of 8 a.m. local time. Prices swung between a gain of 0.2 percent and a loss of 0.3 percent. Immediate-delivery bullion added 0.1 percent, to $1,256.35 an ounce.
Bullion is set for a 10th annual gain as investors seek protection against financial turmoil in Europe and the prospect of slowing economic growth. Gold, traditionally a hedge against rising consumer prices, rallied 15 percent this year amid tame inflation.
Prices should climb to $1,300 in the “next few months,” Citigroup Inc. said in a report dated yesterday.
Indian Festival Demand
The metal fell to $1,253.50 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,255 at yesterday’s afternoon fixing.
“Anaemic western-world growth and the likelihood of interest rates in the major economies remaining on hold for many quarters yet have boosted demand,” Citigroup analysts including David Thurtell said. While near-record prices have hurt physical demand, consumption “should be reasonable during the Indian festival season.”
The Fed said after the close of European markets yesterday that the U.S. economy maintained its expansion while showing “widespread signs of a deceleration” in mid-July through the end of August, according to a survey by 12 regional Fed banks. Five regional banks reported “economic growth at a moderate pace” and two pointed to “positive developments or net improvements.” The remaining five banks said conditions were mixed or decelerating.
German Bank Capital
European Central Bank Chief Economist Juergen Stark said that German banks need more capital, FT Deutschland reported, citing participants of a meeting in Berlin. Stark made the remarks to members of the parliamentary party of Chancellor Angela Merkel’s Christian Democrats, the newspaper said.
Global holdings of gold by exchange-traded products added 0.61 metric ton to 2,077.84 tons yesterday, according to Bloomberg data from 10 providers. Holdings reached a record 2,081.38 tons on Sept. 1.
Silver for December delivery fluctuated between a loss of 1 percent and a gain of 0.3 percent after yesterday reaching $20.18, the highest level for a most-active contract since 2008. The contract was up 0.3 percent at $20.065 at 1:33 p.m. London time. Platinum for October delivery lost $9.20, or 0.6 percent, at $1,553 an ounce. Palladium futures for December delivery fell $3.10, or 0.6 percent, to $524 an ounce.
“Silver prices could benefit from its precious metals status if the global economic recovery faces further headwinds, but rallies will be more limited than those in gold as silver hinges more directly on industrial demand,” Citigroup said. The metal should trade between $18 an ounce and $21 an ounce in the next six to 12 months, the bank said.
To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Sungwoo Park in Seoul at spark47@bloomberg.net.
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