Gold rose to its highest in almost seven months in London as investors bought the precious metal to preserve their wealth on speculation the global economy will deteriorate. Silver climbed to a more than five-month high. Stocks in Europe and Asia retreated on concern banks face further losses and lower debt ratings and as the economic slump deepens. Bullion has climbed 33 percent since October as governments lowered interest rates and spent trillions of dollars to combat the recession. Physical demand has pushed holdings in exchange-traded funds to records. “The very big uncertainties in the stock market and economy are driving investors into gold and precious metals,” said Peter Fertig, owner of Quantitative Commodity Research Ltd. in Hainburg, Germany. “We are seeing the first attempt at reaching the $1,000 mark this week.” Gold for immediate delivery rose as much as $23.84, or 2.5 percent, to $965.59 an ounce, the highest since July 22, and traded at $964.17 by 11:09 a.m. in London. April futures gained $24.60, or 2.6 percent, to $966.90 in electronic trading on the Comex division of the New York Mercantile Exchange. The metal rose to $962.65 in the morning “fixing” in London, used by some mining companies to sell production, from $942.50 at yesterday’s afternoon fixing. Spot prices reached a record $1,032.70 in March and are up 10 percent this year. Some investors are buying precious metals on speculation government stimulus packages will spur inflation, Fertig said. Obama’s Signature President Barack Obama today signs into law a $787 billion economic stimulus package, and Treasury Secretary Timothy Geithner last week pledged as much as $2 trillion in financing for programs aimed at spurring new lending. The Treasury will likely borrow a record $2.5 trillion this fiscal year ending Sept. 30, according to Goldman Sachs Group Inc. The Group of Seven’s finance ministers said after talks in Rome on Feb. 15 that a “severe” economic downturn will persist for most of 2009. Gold in the SPDR Gold Trust, the largest exchange-traded fund backed by bullion, climbed to a record 985.86 metric tons by Feb. 13, gaining 14 percent last week alone. Holdings in ETF Securities Ltd.’s gold exchange-traded commodities rose to an all-time high of 7 million ounces last week, the company said. “Investors have been aggressively adding physical gold to their portfolios as concerns about counterparty risk” increase, ETF Securities wrote in a report. Investors are hedging “against the risk of currency depreciation and longer term inflation risks as government debt projections balloon and an increasing number of central banks move towards quantitative easing.” Euro-Dollar The dollar climbed to a 10-week high against the euro today. Gold typically moves in the opposite direction to the U.S. currency. Still, a stronger dollar has benefited investors holding gold in euros and sterling, with the metal priced in those currencies today reaching records. Bullion also reached a new high in India, the world’s biggest buyer of the metal. Hedge-fund managers and other large speculators increased their net-long position, or bets prices will rise, by 5 percent in New York gold futures in the week ended Feb. 10, according to U.S. Commodity Futures Trading Commission data. “We remain concerned about the longer-term price implications as a result of the scale of buying entering the market, and the potential impact on gold should those longs be spooked,” said James Moore, an analyst at TheBullionDesk.com. Among other metals for immediate delivery in London, silver gained 2.2 percent to $13.92 an ounce, the highest since Aug. 28. Platinum added $13, or 1.2 percent, to $1,078 an ounce, and palladium was 1 percent higher at $217.50 an ounce.

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