BLBG: Gold Advances in Asia as Equities Decline Spurs Haven Buying
By Glenys Sim
Oct. 27 (Bloomberg) -- Gold advanced in Asia as equities extended a decline on concern the global economic slowdown is deepening and government measures won't be enough to stimulate growth, increasing demand for haven investments.
Asia's benchmark MSCI Asia Pacific Index fell for a fourth day, by as much as 3.5 percent, even after the Bank of Korea cut borrowing costs by an unprecedented 75 basis points and Japan said it will compile a package of measures to support the country's stock market.
The rally is ``just temporary,'' said Tetsuya Yoshii, vice president for derivative products at Mizuho Corporate Bank Ltd., in a Bloomberg Television interview today. ``Gold is a safe haven but right now people are just fleeing for cash.''
Gold for immediate delivery gained as much as 1.7 percent to $746.91 an ounce, and was at $737.40 at 12:09 p.m. in Singapore. The metal declined below $700 on Oct. 24. Silver for immediate delivery was up 0.6 percent at $9.4125 an ounce.
``Gold still benefits from its safe haven properties, although these days, more and more are choosing to hold just cash instead, so it won't be surprising to see gold below $700 again,'' Zhu Lv, research manager at Shanghai Tonglian Futures Co., said from Shanghai today.
The dollar advanced to $1.2604 versus the euro at 12:11 p.m. in Singapore from $1.2623 late Oct. 24. The dollar is reasserting its status as the world's reserve currency as investors, banks and even companies are scooping up dollars to repay loans denominated in the currency as the 14-month-long credit crisis intensifies.
Gold for December delivery rose 1 percent to $737.40 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.
Gold for August delivery in Tokyo added 5 percent to 2,216 yen a gram ($731 an ounce) at 12:12 p.m. Singapore.
``We're seeing some consolidation in the market today as investors pause for breath following the roller-coaster we had last week,'' said Zhu.
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
