BS: Gold Rises to Highest Price Since December on Investor Demand
By Pham-Duy Nguyen and Claudia Carpenter
April 30 (Bloomberg) -- Gold climbed to the highest price since December as potential losses in credit markets spurred demand for the precious metal as an alternative to holding currencies.
Assets in the SPDR Gold Trust, the biggest investment fund that buys bullion, jumped the most in a year this week through yesterday. The dollar fell for a third day against the euro after European Commission President Jose Barroso said he’s confident a rescue package for Greece will be done “in days.”
“This is a powerful move for gold,” said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. “There’s significant concern over sovereign debt. We’re in a situation where money, especially from Europe, is moving into gold. Gold is the leading currency.”
Gold futures for June delivery advanced $11.80, or 1 percent, to $1,180.60 an ounce at 9:48 a.m. on the Comex in New York. Earlier, the price rose to $1,181.10, the highest since Dec. 4. The record is $1,227.50 an ounce on Dec. 3.
Prices are up 5.8 percent since the end of March, heading for the biggest monthly jump since November, as investors bought gold after credit ratings in Greece, Portugal and Spain were downgraded by Standard & Poor’s. Gold climbed to records in euros, Swiss francs and sterling this week.
“It is very much the safe-haven appeal of gold that is boosting prices,” said Suki Cooper, an analyst at Barclays Capital in London, who predicts gold will climb to a record in the third quarter.
Low Interest Rates
Investors also bought gold as an alternative to holding dollars, analysts said. The Federal Reserve this week kept the main lending rate between zero and 0.25 percent to revive the U.S. economy. Rates have been unchanged since December 2008.
Low interest rates will continue to erode the dollar, McGhee said.
“While the dollar is the least odious of the paper currencies, gold is going to outperform all currencies,” McGhee said.
Historically, gold has moved inversely to the greenback. Last year, the metal rallied 24 percent as the dollar fell 4.2 percent against a basket of six major currencies, including the euro.
That relationship has changed in 2010 as concern over Europe’s economy boosted the investment appeal of both gold and the U.S. currency. Before today, gold had gained 6.6 percent this year while the dollar rallied 5.3 percent against the currency basket.
SPDR Assets
As of yesterday, the 1.7 percent increase in the SPDR assets this week was the biggest gain since March 2009, figures from the company show. Holdings yesterday rose to a record 1,159 metric tons. That left assets in 19 gold ETFs worldwide at an all-time high of 1,850.1 tons, Cooper said.
Eighteen of 21 traders, analysts and brokers surveyed by Bloomberg, or 86 percent, said gold may rise next week, the most-bullish result since November. Two people expected a decline, and one was neutral.
Silver futures for delivery in July increased 18.1 cents, or 1 percent, to $18.76 an ounce on the Comex, after earlier touching to $18.775, the highest price since Jan. 20.
Platinum futures for delivery in July climbed $11.80, or 0.7 percent, to $1,745.50 an ounce on the New York Mercantile Exchange, and June palladium futures rose $6.60, or 1.2 percent, to $555.60 an ounce.
Prices of palladium, used in jewelry and auto catalysts, have climbed 15 percent this month, heading for the biggest monthly advance since February 2008.
--Editors: Steve Stroth, Michael Arndt.
To contact the reporters on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net; Claudia Carpenter in London at ccarpenter2@bloomberg.net.
To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net
