Gold Gains on Dollar's Drop; Palladium Soars to Highest Level Since 2001
Oct. 25 (Bloomberg) -- George Gero, senior vice president at RBC Capital Markets, talks about commodity prices, investment opportunities and the dollar's performance. Gero speaks with Carol Massar and Matt Miller on Bloomberg Television's "Street Smart." (Source: Bloomberg)
Oct. 22 (Bloomberg) -- Jeffrey Currie, head of commodities research at Goldman Sachs Group Inc. talks about investing in commodities including gold, oil, corn, copper and platinum. He speaks with Francine Lacqua on Bloomberg Television's "On The Move." (Source: Bloomberg)
Gold futures rose the most in more than a week as the dollar fell, boosting demand for the precious metal as an alternative investment. Palladium advanced to a nine-year high.
The greenback dropped as much as 1 percent against a basket of major currencies. A Group of 20 pledge to avoid “competitive devaluation” failed to ease speculation that the Federal Reserve will make more bond purchases, eroding the value of the dollar. Gold has gained 22 percent this year, reaching a record $1,388.10 an ounce on Oct. 14.
“The Fed has put the world on notice that the dollar can no longer be viewed as a safe-haven currency,” Michael Pento, a senior economist at Euro Pacific Capital in New York, said in a report. “During the next crisis, investors should seek the safer harbor that is derived from owning commodities and precious metals.”
Gold futures for December delivery rose $13.80, or 1 percent, to settle at $1,338.90 an ounce at 1:55 p.m. on the Comex in New York, the biggest gain for a most-active contract since Oct. 13. Last week, the metal tumbled 3.4 percent, the most since early July.
G-20 officials, ending a meeting in South Korea on Oct. 23, agreed to refrain from “competitive devaluation” and allow markets to set foreign-exchange values, seeking to calm trade tensions. G-20 members will meet again in Seoul on Nov. 11.
“It is safe to sell the dollar on all fronts,” Dennis Gartman, an economist and the editor of the Suffolk, Virginia- based Gartman Letter, said after the meeting. “The world wants to swap dollars for hard assets.”
‘Physical Demand’
UBS AG said its gold sales on Oct. 22 to India, the world’s largest buyer, were the third-highest this year.
“At current prices near $1,350, demand will likely pull back a bit, but should remain healthy” before the Diwali festival at the beginning of next month, Edel Tully, an analyst at UBS in London, said today in a report. “Physical demand at the levels we saw on Friday is usually an indicator that gold’s price trough is very near.”
Palladium futures for December delivery rose $17.70, or 3 percent, to $608.80 an ounce on the New York Mercantile Exchange. Earlier, the price reached $620, the highest level since June 2001. The commodity has jumped 49 percent this year, outpacing gold and other precious metals.
Platinum futures for January delivery gained $21.90, or 1.3 percent, to $1,697 an ounce. The price has climbed 15 percent this year.
Palladium and platinum are used to make jewelry and pollution-control devices in cars.
“Palladium has a high exposure to the emerging-markets auto industry,” said Bayram Dincer, an analyst at LGT Capital Management in Switzerland.
Silver futures for December delivery rose 42.6 cents, or 1.8 percent, to $23.544 an ounce on the Comex. The price has gained 40 percent this year, reaching $24.95 on Oct. 14, the highest level in 30 years.
To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.
To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net
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