Gold Rises to 3-Month High; Silver Has Longest Rally Since ’68

Gold advanced to the highest in more than three months as speculation the U.S. economic recovery will slow spurred demand for a haven. Silver headed for the longest rally in more than four decades.

Last week, gold climbed 4.1 percent, the most since Aug. 16. U.S. factory production unexpectedly declined in January by the most since May 2009, according to a report on Feb. 14. The metal will establish a new range above $1,300 an ounce, and U.S. investors are becoming friendlier to the commodity, UBS AG said in a report today.

Gold last year tumbled the most since 1981 after some investors lost faith in the metal as a store of value, while U.S. policy makers signaled they will slow stimulus. The price has climbed 10 percent this year.

“It is the insurance product against further emerging market turmoil, more bad U.S. data, potentially too frothy equity markets and unforeseen market shocks,” UBS analysts in London, who met with U.S. clients last week, wrote in the report. “With positioning so light and the sentiment turn in gold’s favor so recent, we expect that gold will remain bid.”

Gold for immediate delivery rose 1 percent to $1,331.50 at 4:32 p.m. New York time. Earlier, the price reached $1,337.93, the highest since Oct. 31.

Floor trading on the Comex in New York was closed for a public holiday.

Federal Reserve

The Federal Reserve’s monthly bond purchases have been reduced to $65 billion after cuts of $10 billion at each of its past two meetings. Fed Chairman Janet Yellen said last week that debt buying isn’t on a “pre-set course.” Gold jumped 70 percent from December 2008 to June 2011 as the central bank pumped more than $2 trillion into the financial system.

Holdings in gold-backed exchange-traded products rose 3.2 metric tons last week, the most since December 2012, data compiled by Bloomberg show. Last month, assets touched the lowest since October 2009. Billionaire John Paulson, the largest investor in the SPDR Gold Trust, the biggest ETP, kept his stake unchanged in the fourth quarter, according to a government filing Feb. 14.

Silver for immediate delivery rose 0.9 percent to $21.70 an ounce. Earlier, the price reached $21.98, the highest since Nov. 7. The metal headed for the 12th straight gain, the longest rally since at least 1968.

Spot palladium climbed 0.6 percent to $741.75 an ounce. Earlier, the price reached a three-week high of $743.34. The metal advanced for the ninth straight day, the longest rally since September 2012.

Platinum for immediate delivery rose 0.2 percent to $1,430.50 an ounce. Earlier, the price reached a three-week high of $1,434.56.

More than 70,000 Association of Mineworkers and Construction Union members have been on strike since Jan. 23 at Anglo American Platinum Ltd., Impala Platinum Holdings Ltd. and Lonmin Plc mines in South Africa.

To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Phoebe Sedgman in Melbourne at psedgman2@bloomberg.net

To contact the editor responsible for this story: Millie Munshi at mmunshi@bloomberg.net

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