Gold climbed to the highest in three weeks as concern that Europe’s debt crisis may intensify boosted the appeal of the precious metal as a haven. Palladium slumped the most in more than four months.
Lawmakers in Cyprus today voted to shoot down an unprecedented levy on bank deposits, a key demand of European officials in return for funds to prevent a financial collapse. The Federal Reserve begins a two-day policy meeting today. Gold climbed to a record $1,923.70 an ounce in September 2011 amid Europe’s fiscal woes and as the U.S. central bank expanded its balance sheet in a bid to revive growth.
“Cyprus has become a big issue, and investors are worried about the repercussions,” Adam Klopfenstein, a senior market strategist at Archer Financial Services Inc. in Chicago, said in a telephone interview. “People want to know when the Fed plans to end the easing.”
Gold futures for April delivery rose 0.4 percent to settle at $1,611.30 at 1:36 p.m. on the Comex in New York, after touching $1,615, the highest for a most-active contract since Feb. 26.
Prices have slumped 3.8 percent this year as signs of recovery in the U.S. spurred speculation that the Fed will cut stimulus measures. Minutes of the previous Fed meeting released on Feb. 20 showed some policy makers said the central bank should be ready to vary the pace of its monthly $85 billion in bond purchases, while Chairman Ben S. Bernanke defended the program during congressional testimony last month.
Holdings in the SPDR Gold Trust, the biggest exchange-traded-fund backed by the metal, fell to 1,219.5 metric tons yesterday, the lowest since July 2011.
Global economic turmoil may last “at least two more years,” and liquidity injections by industrialized countries have only bought time, not solved problems, Kaushik Basu, the chief economist at the World Bank, said today in Washington. While Cyprus accounts for less than half a percent of the euro economy, the fight over the bank tax risks triggering new tumult in the financial crisis that began in 2009 in Greece.
On the New York Mercantile Exchange, palladium futures for June delivery slumped 3.9 percent to $735.20 an ounce, the biggest drop since Oct. 23. Platinum futures for April delivery fell 1.5 percent to $1,555.40 an ounce, after touching $1,549.80, the lowest since Jan. 4.
Silver futures for May delivery slipped 0.1 percent to $28.843 an ounce on the Comex.
In the spot market, an ounce of platinum bought as little as 0.961 ounce of gold, the least since Jan. 9.