Gold May Climb on Chinese Inflation Figures, Concern About European Debts
Gold may gain for a fourth day in New York as concerns about inflation and Europe’s debt woes spur demand for precious metals as a protection of wealth.
China’s consumer prices rose 5.3 percent in April from a year earlier and have exceeded the government’s target each month this year, data showed today. The euro fell against the dollar amid speculation European leaders are slowing the drive to grant Greece additional aid, fueling concern the nation may be forced to restructure its debt.
“We still have unresolved issues with the euro zone,” said Bernard Sin, the head of currency and metal trading at MKS Finance SA, a bullion refiner in Geneva. “In the long term, it may be sensible to hedge against inflation with gold. Physical demand is extremely good” from India, he said.
Gold for June delivery fell 50 cents to $1,516.40 an ounce by 7:57 a.m. on the Comex in New York. Prices reached a record $1,577.40 on May 2 before slumping 4.2 percent last week. Immediate-delivery gold was little changed at $1,516.20 in London.
Bullion rose to $1,524.50 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,513.50 at yesterday’s afternoon fixing. Spot prices have advanced in the past 10 years, the longest run of gains since at least 1920 in London.
China’s inflation was more than the 5.2 percent median forecast in a Bloomberg survey of 30 economists and compared with a 5.4 percent increase in March. The government aims to limit inflation to 4 percent this year, and has raised interest rates four times since October to cool growth. Inflation in Germany accelerated more than initially estimated in April, data showed today.
‘Appetite’ for Gold
“Signs of continued pressures might see the market’s preoccupation with rising global inflation resurface, and consequently see some inflation-hedge demand,” Marc Ground, an analyst at Standard Bank Plc, wrote in a report. “With the resurfacing of euro-zone sovereign-debt concerns, we expect to see continued appetite for gold and silver.”
Standard & Poor’s this week downgraded Greece’s credit rating for the fourth time since April 2010, signaling that the region’s debt crisis is escalating. European leaders slowed the country’s drive for extra aid, saying the government in Athens must first make good on pledges to overhaul an economy mired in a three-year recession.
UBS AG’s gold sales to India so far this year are more than 10 percent higher than in the same period last year, London- based analyst Edel Tully said today in a report. India is the biggest buyer of bullion.
Silver Prices
Silver for July delivery declined 0.6 percent to $38.25 an ounce on the Comex, after climbing the previous two days.
Silver futures slumped 27 percent last week, the worst weekly drop since at least 1975, as investors sold commodities from oil to copper and exchange owner CME Group Inc. (CME) increased the cost of making new speculative positions. Prices slid as much as 34 percent since reaching a 31-year high of $49.845 an ounce on April 25. A bear market is defined by some investors as a decline of 20 percent or more.
Silver assets held in exchange traded products rebounded from a six-month low, gaining 208.03 metric tons, or 1.5 percent, to 14,399.24 tons, data compiled by Bloomberg show. Assets dropped 7.6 percent in the six days through May 9. Gold ETP holdings fell 4.49 tons, or 0.2 percent, to 2,050.15 tons yesterday, data showed.
Palladium for June delivery was down 1 percent at $725.60 an ounce. Platinum for July delivery declined 0.3 percent to $1,791.25 an ounce.
To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Kyoungwha Kim in Singapore at kkim19@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net
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