By Kim Kyoungwha May 26 (Bloomberg) -- Gold climbed for a third day as investors sought a haven from geopolitical tensions on the Korean peninsula and Europe’s debt crisis. UBS AG said the metal may rise to a record within a month. Gold for immediate delivery rose 0.2 percent to $1,206.08 an ounce at 2:16 p.m. in Singapore, compared with yesterday’s close of $1,204.25 and the all-time high of $1,249.40 reached on May 14. The June delivery contract climbed 0.7 percent. “Gold is again benefiting from safe-haven flows as uncertainty and risk aversion across markets persist,” said Stefan Graber, a Singapore-based analyst with Credit Suisse AG. “We expect gold to continue to attract fresh flows in the near term. Even a test of previous high is possible.” The dollar rose against a basket of six counterparts, including the euro, amid investor concern that Europe’s government debt crisis has yet to run its course. U.S. Treasury Secretary Timothy F. Geithner said yesterday that Europe needs to revamp its fiscal policies to avoid crises. North Korea said it will sever all ties with South Korea and expel the South’s workers from a joint industrial zone as “punishment” for accusing it of sinking a warship. North Korean leader Kim Jong Il told the military to be combat-ready, a Seoul-based dissident group reported, prompting the South Korean won to weaken 3 percent yesterday. “Military tension in Korea should prompt safe-haven flows,” Edel Tully, London-based analyst with UBS AG, wrote in a report. “For gold, a number of buying forces are now aligned which indicates that current demand is quite broad-based. We retain our one-month forecast of $1,300.” Record Holdings Gold has strengthened more than 2 percent this week after a 4.6 percent slide last week, the most since Feb. 2009. Holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, increased 30.43 metric tons to a record 1,267.32 metric tons yesterday, according to the company’s website. “Last week’s sharp drop did not unduly damage its uptrend,” Axel Rudolph, a technical analyst at Commerzbank AG, wrote in a report yesterday. “Gold’s consolidation may have run its course near term.” The metal will target $1,214 this week, he said. Silver for immediate delivery advanced 0.5 percent to $18.04 an ounce, platinum was little changed at $1,514.40 an ounce, and palladium increased 0.5 percent to $445.36 an ounce. --Editor: Jake Lloyd-Smith To contact the reporter on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net To contact the editor responsible for this story: Jim Poole at jpoole4@bloomberg.net

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