BLBG: Gold Prices Rise on Demand for Haven; Silver, Platinum Advance
Gold prices rose on speculation the recession will deepen, boosting the appeal of the precious metal as a haven. Silver and platinum also gained.
The number of Americans filing first-time claims for unemployment insurance last week rose to a 26-year high, the government said today. Personal spending declined 0.6 percent last month from October, while durable-goods orders fell 1 percent. Gold is poised for an eighth-straight annual gain, while the Standard & Poor’s 500 Index is down 41 percent.
“Gold is being supported because there’s still a significant amount of fear out there,” said Leonard Kaplan, the president of Prospector Asset Management in Evanston, Illinois. “That’s driving purchases.”
Gold futures for February delivery rose $6.50, or 0.8 percent, to $844.60 an ounce at 11:15 a.m. on the Comex division of the New York Mercantile Exchange.
Silver futures for March delivery gained 11 cents, or 1.1 percent, to $10.37 an ounce.
Platinum futures for April delivery climbed $12.80, or 1.5 percent, to $863.30 an ounce on the Nymex. Palladium for March delivery rose 30 cents to $175.
Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, has remained at a record 775.3 metric tons since Dec. 17.
Gold also gained as the dollar fell against a basket of six major currencies. Metals and other commodities often move in the opposite direction of the U.S. currency.
‘Deflationary Recession’
Still, gold may fall to $600 next year as consumers spend less and demand for all assets declines, Kaplan said.
“Gold has some catching up to do on the downside,” Kaplan said. “In a deflationary recession, gold goes down, but it goes down less than other assets.”
Cocoa, sugar and lean hogs are the only other commodities on the Reuters/Jefferies CRB Index of 19 raw materials headed for an annual gain. Platinum and palladium have lost more than 40 percent and silver is down 31 percent.
“If we have to take a short-term view of gold, we’ll err upon the side of being bearish,” said Dennis Gartman, an economist and the editor of the Suffolk, Virginia-based Gartman Letter. “If we have to take a longer-term perspective, one that is months or years, then we shall err on the side of being bullish.”
The Comex and Nymex are closed tomorrow for the Christmas holiday.
