BLBG: Gold Gains in Asia, Paring Weekly Loss, as Investors Seek Haven
Gold climbed for a second day Asia, paring the week’s loss, as investors deemed a recent eight-day slump as excessive amid a plunge in global equities, and sought out a safe-haven investment.
Asian shares declined today amid investors’ concerns about the stability of the U.S. financial system, after U.S. and European stocks tumbled yesterday. Citigroup Inc., once the world’s biggest bank by market value, traded for less than a $1 for the first time.
“Gold’s going to keep trading in a broad $900 to $1,000 range in the near to medium term,” Zhu Lv, research manager at Shanghai Tonglian Futures Co., said today from Shanghai. “These are important psychological levels to hold and it’s going to take something very big to happen to break those levels, could be some economic shock or fresh company losses.”
Gold for immediate delivery rose as much as $3.70, or 0.4 percent, to $936.10 an ounce before trading at $935.55 at 11:45 a.m. in Singapore, extending yesterday’s 2.9 percent gain. The precious metal had lost 8.7 percent between Feb. 23 and March 4.
Assets in the SPDR Gold Trust, the biggest such fund backed by bullion, held at a record 1,029.29 metric tons for a fifth day yesterday. Holdings in the fund have increased 32 percent since the start of the year as investors sought haven assets.
Still, bullion is down 0.7 percent this week and 7 percent lower than the 11-month high of $1,006.29 an ounce reached Feb. 20 as investors sold the metal to lock in gains.
The Bank of England yesterday reduced its benchmark interest rate by a half point to almost zero, joining the European Central Bank’s rate cut to a record low of 1.5 percent.
New High
If more central banks follow suit, gold may scale a new high on investors’ “flight to quality,” according to Morgan Stanley.
“With gold failing to close above $1,000, prices have seemed a little frothy and have moved lower in the early days of March,” the bank’s analysts led by Hussein Allidina wrote in a report. “We still expect market conditions to favor gold prices, given uncertainty in both global and financial markets as well as our optimism that central banks will do whatever it takes to bolster liquidity.”
Among other precious metals for immediate delivery, silver rose 0.6 percent to $13.33 an ounce, platinum gained 0.4 percent to $1,068.50 an ounce, and palladium was little changed at $199 an ounce as of 11:48 a.m. in Singapore.
