Gold Advances to Record as Economy, Debt Concerns Spur Demand for a Haven

Gold surged to a record $1,899.40 an ounce as mounting concern that the global economy is slowing amid debt crises spurred demand for bullion as a protection of wealth. Platinum rose to a three-year high.

German Chancellor Angela Merkel attempted to shut the door on common euro-area bonds as a means to solve the debt crisis, saying she won’t let financial markets dictate policy. The Federal Reserve holds its annual symposium in Jackson Hole, Wyoming, this week, amid speculation that it may signal a third round of asset purchases to boost the faltering recovery.

“The sovereign-debt issues remain, and Germany has to decide whether it wants to carry the financial burden of the rest of Europe on its shoulder,” Matthew Zeman, a strategist at Kingsview Financial in Chicago, said in a telephone interview. “There are expectations that the Fed may talk about printing more money, and that is positive for gold and negative for the dollar.”

Gold futures for December delivery gained $39.70, or 2.1 percent, to close at $1,891.90 an ounce at 2:05 p.m. on the Comex in New York, the highest settlement ever. The precious metal rose 6.3 percent last week, the most since February 2009. It has advanced 16 percent this month.

‘Remains in Demand’

“Gold is still the safe haven, and as long as people fear recession in the U.S. and euro-zone debt problems, gold remains in demand,” Peter Fertig, the owner of Quantitative Commodity Research Ltd. in Hainburg, Germany, said by telephone. More U.S. asset purchases “would be bullish for gold,” he said.

The dollar has declined 6.3 percent against a basket of six currencies this year. Gold is in the 11th year of a bull market, the longest winning streak since at least 1920 in London, as investors seek to diversify their holdings away from equities and some currencies. Global stocks earlier this month slipped to an 11-month low, and bullion reached all-time highs today in euros, British pounds and Swiss francs.

The metal has gained 33 percent this year. The MSCI All- Country World Index fell 12 percent, the Standard & Poor’s GSCI Index of 24 commodities rose 2.4 percent, while Treasuries returned 7.7 percent, a Bank of America Merrill Lynch index showed.

Quantitative Easing

The Fed bought $600 billion in Treasuries from November through June in a second round of so-called quantitative easing, or QE2. The central bank said Aug. 9 that U.S. economic growth was “considerably slower” than anticipated and it’s ready to use a range of policy tools to boost the economy. The Fed pledged to keep interest rates near zero at least until mid-2013.

Silver futures for December delivery in New York gained 89.8 cents, or 2.1 percent, to close at $43.365 an ounce on the Comex. Earlier, it jumped to $44.10, the highest since May 3.

Platinum futures for October delivery advanced $30.80, or 1.6 percent, to $1,905.70 an ounce on the New York Mercantile Exchange, after touching $1,909.90, the highest since July 17, 2008. The metal gained for the 11th straight session, the longest rally since October 2007.

Palladium futures for September delivery rose $16.30, or 2.2 percent, to $765.10 an ounce on the Nymex.

To contact the reporters for this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Debarati Roy in New York at droy5@bloomberg.net.

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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