Nov. 21 (Bloomberg) -- Gold climbed, capping the biggest weekly gain since September, as the global economic slump dragged down asset prices and boosted the appeal of the precious metal as a store of value. Silver and platinum also rose.
Gold was the biggest gainer today, followed by silver, among 19 commodities on the Reuters/Jefferies CRB Index. As recessions grip the U.S., Japan and parts of Europe, central banks may be forced to lower interest rates and pump more liquidity into the financial system, devaluing their currencies, analysts said.
``Hard assets for hard times,'' said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. ``Even with all the money central banks have thrown at the financial system, it's not enough to stop systemic risk. People are looking for something that's going to go up, and that's gold.''
Gold futures for December delivery jumped $43.10, or 5.8 percent, to $791.80 an ounce on the Comex division of the New York Mercantile Exchange. The metal gained 6.6 percent this week, the biggest increase for a most-active contract since the week ended Sept. 19.
Silver futures for March delivery rose 45.6 cents, or 5 percent, to $9.505 an ounce on Comex.
Platinum futures for January delivery climbed $35.60, or 4.5 percent, to $825.70 an ounce on Nymex. Palladium for March delivery fell 80 cents, or 0.4 percent, to $180.25 an ounce.
``Any steps to avert deflation would be bearish for the dollar and a signal for gold to rally in 2009,'' analysts at Deutsche Bank AG said today in a report. ``In the 1930s, a relatively quick solution to deflation in the U.S. was a significant depreciation in the U.S. dollar.''
Sole Gainer
Gold is the only asset in the Deutsche Bank Commodity Long Index that's posted gains over the past month, the bank said.
Silver may average $13 next year as investors make up for slumping industrial demand and a production surplus, researcher GFMS Ltd. said yesterday. The metal averaged $15.53 this year.
Goldman Sachs Group Inc. said today that the U.S. recession would be deeper than it had predicted previously, with fourth- quarter gross domestic product likely to decline at an annualized rate of 5 percent. The bank projected U.S. unemployment to reach 9 percent by the end of next year, from 6.5 percent last month.
``The dollar will start to soften once the global liquidation panic is over,'' said Adrian Day, president of Adrian Day's Asset Management in Annapolis, Maryland. ``The positive factors for gold are longer term. The massive dollar creation will lead to a dollar decline.''
The Federal Reserve lowered its benchmark interest rate 4.25 percentage points from September 2007 to October and signaled further cuts at its last meeting.
Collapsing Value
The collapse of Lehman Brothers Holdings Inc. in September triggered a $700 billion U.S. government bailout for banks. The Standard & Poor's 500 Index yesterday closed at the lowest level in 11 years as crude oil dropped to the lowest since May 2005.
``Gold could maintain strength as other commodities decline,'' Philip Gotthelf, president of Equidex Brokerage Group Inc. in Closter, New Jersey, said in a report yesterday. ``We are seeing impressive stability in gold while crude oil makes new lows.''
Gold is down 5.5 percent this year while crude-oil futures, which rose 1 percent on Nymex today, still have plunged 48 percent. Silver has dropped 36 percent in 2008 while platinum and palladium have fallen more than 40 percent each.
To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.
