BLBG: Gold Is Little Changed on Stock Rally; Silver Rises for 3rd Day
Gold prices were little changed as equities rallied on expectations the U.S. Congress will pass a stimulus package to revive the economy. Silver gained for the third day in a row.
U.S. stocks advanced on speculation a government report showing the highest unemployment rate since 1992 will force lawmakers to pass a $900 billion rescue plan. UBS AG and Goldman Sachs Group Inc. raised their gold-price forecasts this week, saying investors will seek a store of value in precious metals as the economy deteriorates.
“Some money is being pulled toward the equity markets,” said Tom Pawlicki, an analyst at MF Global Ltd. in Chicago. “There’s a bit of risk appetite taking place, and that’s negative for gold.”
Gold futures for April delivery rose 10 cents to $914.30 an ounce on the Comex division of the New York Mercantile Exchange. Earlier, the price dropped as much as $8.80 and gained as much as $7.70. The metal fell 1.5 percent this week after jumping 11 percent in the previous two weeks.
Gold for immediate delivery fell $1.20, or 0.1 percent, to $913.35 an ounce at 2:20 p.m. New York time.
Silver futures for March delivery climbed 41 cents, or 3.2 percent, to $13.16 an ounce. The metal gained 4.7 percent this week.
In 2009, silver has gained 17 percent, while gold is up 3.4 percent.
The Standard & Poor’s 500 Index rose as much as 2.9 percent today. Equities in Europe and Asia also rallied.
Still, some investors purchased gold on speculation passage of the stimulus package will ignite inflation.
‘Inflation Worries’
“Gold traders are likely to be buying on inflation worries if the stimulus bill passes,” said Tom Hartmann, a commodity analyst at AltaVest Worldwide Trading Inc. in Mission Viejo, California.
Central banks are lowering interest rates and governments are spending trillions of dollars to revive their economies.
“Fear and uncertainty still reign,” said Ron Goodis, the retail-trading director at Equidex Brokerage Group Inc. in Closter, New Jersey. “Money is still looking for a safe haven, and gold looks like it’s the place to be.”
Silver, platinum and palladium rose on speculation that industrial metals and other commodities will benefit as government spending boosts demand for raw materials. China, the world’s largest user of copper, has begun investing the second part of its 4 trillion yuan ($580 billion) stimulus plan.
“The Chinese economy could be nearing its low and starting to restock on commodities,” Pawlicki of MF Global said. “The industrialized precious metals are rising relative to gold, which has little industrial use.”
Last year, gold gained 5.5 percent. Silver declined 24 percent, platinum fell 38 percent and palladium plunged 50 percent.
