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Gold Rises to Record on Demand for Haven Amid Europe Debt Woes

Nov. 9 (Bloomberg) -- Gold advanced to another record on speculation that European governments may struggle to pay debt, boosting demand for the precious metal as an alternative to currencies. Silver extended a rally to a 30-year high.

In New York, gold futures rose to an all-time high of $1,424.30 an ounce on concern that Ireland and Greece will struggle to repay bondholders, and spending cuts may stifle growth in the region. The metal has gained 29 percent this year, heading for the 10th straight annual gain.

“Gold has now turned its eyes to the European sovereign-debt situation,” said Frank McGhee, the head dealer at Integrated Brokerage Services in Chicago. “It will continue to rally as a flight to quality.”

Gold futures for December delivery rose $6.90, or 0.5 percent, to settle at $1,410.10 an ounce at 1:30 p.m. on the Comex in New York. The metal climbed to an all-time high for the fourth straight session. The price for immediate delivery reached a record $1,424.60.

European Union Economic and Monetary Affairs Commissioner Olli Rehn is in Ireland today to examine the country’s budget after the government in Dublin laid out a plan last week to cut spending and raise taxes by as much as 6 billion euros ($8.3 billion) in 2011. Earlier this year, Greek debt woes drove gold higher.

Gold priced in euros and Swiss francs rose to the highest level since June. The metal priced in U.K. pounds climbed to the highest level since at least January 2000, data compiled by Bloomberg show.

Inflation Concerns

Governments have spent trillions of dollars to bolster their economies, driving the value of currencies lower. Last week, the Federal Reserve said it will buy an additional $600 billion of Treasuries through June.

The Fed’s so-called quantitative easing will spark inflation, said Peter Schiff, the president of Euro Pacific Capital in Westport, Connecticut. He recommends buying gold.

“Rising prices will soon become a daily occurrence on Main Street,” Schiff said.

Yesterday, holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, rose 2.4 metric tons to 1,294.2 tons, the first increase since Oct. 14.

Silver futures for December delivery rose $1.1474, or 5.4 percent, to $28.906 an ounce. Earlier, the price reached $29.34, the highest level since March 1980.

The metal has jumped 72 percent this year. Futures reached an all-time high of $50.35 in 1980.

“We can’t fight the current momentum,” Edel Tully, an analyst at UBS AG in London, said in a report. “The speed of silver’s rally makes it look vulnerable to a setback. Don’t fight the trend, but be careful.”

Palladium futures for December delivery rose $31.75, or 4.5 percent, to $742.65 an ounce on the New York Mercantile Exchange. Earlier, the price reached $743.50, the highest level since April 2001. The metal has gained 82 percent this year.

Platinum futures for January delivery advanced $38.50, or 2.2 percent, to $1,809.60 an ounce. Earlier, the price reached $1,811.80, the highest level since July 24, 2008.

To contact the reporters on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net; Nicholas Larkin in London at 2069 or nlarkin1@bloomberg.net

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

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