Gold rose to a record in New York and London as investors sought protection against turmoil in the global economy and financial markets. Silver rose to the highest price since March 2008.
Bullion futures climbed as high as $1,279.50 an ounce. The dollar fell to a five-week low against the euro today. The metal usually moves inversely to the U.S. currency. Global holdings of gold by exchange-traded products are up 16 percent this year and this month reached a record, Bloomberg data show.
“People are worried about the European financial system and debt market, and the outlook for the U.S. and global economy,” said Mark O’Byrne, executive director of brokerage GoldCore Ltd. in Dublin. “People are worried about equities, debt, property” and currencies, he said.
Gold, up 16 percent this year, is heading for its 10th consecutive annual gain, the longest winning streak since at least 1920. Bullion has outperformed global equities, Treasuries and most industrial metals, prompting record investments in gold-backed ETPs. The metal reached all-time highs in euros, sterling and Swiss francs in June.
Gold futures for December delivery added $7.10, or 0.6 percent, to $1,275.80 an ounce at 8:51 a.m. on the Comex in New York. Prices surpassed the previous all-time high of $1,276.50 set Sept. 14. Bullion for immediate delivery in London gained as much as 0.8 percent to a record $1,278.02 an ounce and was last at $1,273.10.
Bullion has gained as the MSCI World Index of equities fell 1 percent this year. Copper added 4.1 percent and crude oil is down 5.3 percent. Silver and palladium have outperformed bullion this year. Gold priced in Swiss francs today climbed to the highest level since July 5.
Yen-Dollar
The yen advanced against the dollar today, paring losses from yesterday when Japan’s government intervened for the first time since 2004 to curb gains that threaten an export-led recovery. The greenback slipped as much as 0.8 percent against the euro today.
“The dollar has been weakening and that’s been helping gold,” said Eugen Weinberg, head of commodity research at Commerzbank AG. “Investors are looking for a safe haven.”
The Federal Reserve has kept its main interest rate at a record low to stimulate the economy. The central bank last month resumed direct purchases of Treasuries, also known as quantitative easing. The Fed first resorted to buying bonds as part of its response to the world financial crisis.
Quantitative Easing
Economists at Goldman Sachs Group Inc. expect the Fed to announce as early as November a new round of asset purchases to support a weak economy. Treasury purchases may total about $1 trillion in another round of quantitative easing, according to Jan Hatzius, chief U.S. economist for Goldman Sachs.
“Gold has recently been driven notably by the perceived increasing probability of a new round of quantitative easing in the U.S.,” said Anne-Laure Tremblay, a London-based analyst at BNP Paribas SA. “Quantitative easing tends to be supportive of asset prices and is fuelling concerns about the potential longer-term inflationary impact of such measures.”
Still, bullion has gained this year even as U.S. inflation slowed. The metal is traditionally bought as a hedge against rising consumer prices. Inflation expectations, based on the 10-year U.S. Treasury breakeven rate, have fallen to 1.78 percent from 2.25 percent six months ago.
Silver for December delivery in New York added as much as 1.1 percent to $20.795 an ounce, the highest price since March 2008. The metal was last at $20.725, taking its yearly gain to 23 percent.
Global holdings of silver by ETPs gained 45.8 metric tons to 13,211.9 tons yesterday, according to Bloomberg data from four providers. That’s the highest in at least seven months.
Platinum for October was 0.4 percent higher at $1,611.50 an ounce after yesterday reaching $1,613.50, the highest level since June 21. Palladium for December rose 0.7 percent to $563.50 an ounce. The metal earlier today reached $564.55, the highest price since April 27.
To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net.
Source: http://www.bloomberg.com/news/2010-09-16/gold-rises-to-a-record-as-investors-seek-protection-against-market-turmoil.html
