BLBG: Gold Rises on Demand for Jewelry in India, Hedge Against Stocks
Gold rose for a second day in London on demand for an alternative to stocks and on higher imports into India, the world’s largest consumer of the precious metal. Platinum, silver and palladium also gained.
The MSCI World Index of shares fell as much as 0.6 percent, taking this year’s drop to 8.2 percent. Gold is up 1.3 percent in 2009. Paul Tustain, founder of gold storage and trading company BullionVault, said yesterday that gold may double to a record in five years as investors seek an alternative to cash.
“There seems to be a temporary inverse relationship with equities and gold,” said Emanuel Georgouras, a precious metals trader at Marex Financial Ltd. in London. “India has found some jewelry demand recently.”
Gold for immediate delivery rose $5.15, or 0.6 percent, to $889.65 an ounce at 9:20 a.m. local time. Prices climbed 1.8 percent yesterday, halting a four-week slide. June gold futures gained 0.3 percent to $890.40 an ounce in electronic trading on the New York Mercantile Exchange’s Comex division.
The Standard & Poor’s 500 Index has dropped 7.9 percent this year. Gold advanced 5.8 percent last year when the S&P declined 38 percent and the euro declined 4.2 percent against the dollar.
“I regard gold as a good way of storing value when currencies can’t be trusted” in times of deflation or inflation, Tustain said in an interview yesterday, forecasting a gold price of $2,000 an ounce in five years. Gold rose to a record $1,032.70 an ounce in March 2008.
‘Very Good Market’
“The expected return on cash is negative and will be for the foreseeable future,” Tustain said. “That creates a very good market for owners of gold.”
India’s central bank reduced interest rates for the sixth consecutive month to 3.25 percent, a record low. Sweden’s central bank, the world’s oldest, cut its main rate to 0.5 percent.
Gold imports by India may more than double this month from a year ago as the recent price decline revives demand ahead of the nation’s Akshaya Tritiya festival next week.
Purchases may reach 50 metric tons from about 25 tons last year, said Harmesh Arora, vice president of the Bombay Bullion Association Ltd. About 10 tons has been imported since April 1, he said in Mumbai.
Assets in the SPDR Gold Trust, the biggest exchange-traded fund backed by the metal, were unchanged yesterday at 35.56 million ounces.
Among other metals for immediate delivery, silver rose 1.1 percent to $12.22 an ounce. Platinum gained 0.2 percent to $1,167 an ounce, and palladium added 0.3 percent to $225.25 an ounce.
