Gold Set for Biggest Weekly Gain in 2011; Silver at 30-Year High
Gold is set for its biggest weekly advance this year as unrest in the Middle East, rising inflation and a weakening dollar combined to fuel demand for the metal as an alternative investment. Silver rose to a 30-year high.
Immediate-delivery bullion was little changed at $1,385.38 an ounce at 1:32 p.m. in Singapore and has gained 2 percent this week, the biggest advance since the week ended Dec. 31. Futures for April delivery were little changed at $1,385.80.
“Gold remains as attractive as ever,” said Gavin Wendt, a Sydney-based resource analyst with MineLife Pty Ltd. “There’s no compelling reason to sell gold, with growing political uncertainty in North Africa and potentially elsewhere, escalating food prices fanning inflation and the U.S. sitting on an ever-growing pile of debt.”
Gold has fallen 2.5 percent this year after rallying 30 percent in 2010 and touching a record $1,431.25 an ounce in December. Eleven of 15 traders, investors and analysts surveyed by Bloomberg, or 73 percent, said the metal will rise next week.
China, India, Indonesia, Thailand and South Korea have boosted interest rates as policy makers sought to cool the economies leading a global rebound. Pro-democracy demonstrations in Bahrain and civil unrest in Libya and Yemen have renewed concern fanned by the overthrow of Egypt’s President Hosni Mubarak.
Bullion is “supported by continued unrest in the Middle East and a weaker U.S. dollar,” Mark Pervan, senior commodity strategist with ANZ Banking Group Ltd., wrote in a note to clients today. The Dollar Index, a six-currency gauge of the dollar’s value, has declined 0.6 percent this week, reversing an advance last week. Gold typically moves inversely to the dollar.
Record Demand
Indian and Chinese jewelry demand climbed to a record last year, the World Gold Council said in a report yesterday. Usage in India advanced 47 percent in the fourth quarter to 210.5 metric tons, and consumption in China rose 26 percent to 115.8 tons, the group said.
Assets in gold-backed exchange traded products increased 3.5 tons to 2,019.92 tons yesterday, the first rise in three days, data compiled by Bloomberg from 10 providers show. Holdings reached a record 2,114.6 tons in December.
Silver for immediate delivery increased to $31.81 an ounce today, the highest level since 1980, before trading at $31.69 an ounce. Platinum for immediate delivery dropped 0.4 percent to $1,840.45 an ounce and spot palladium was up 0.2 percent at $846.43 an ounce.
To contact the reporter on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
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