BLBG: Gold Climbs Near Record as Investors Seek Currency Alternative
By Nicholas Larkin and Kim Kyoungwha
June 8 (Bloomberg) -- Gold climbed to within 0.3 percent of a record in London as investors sought an alternative to currencies as concern over Europe’s debt crisis mounts.
The metal climbed to all-time highs in Swiss francs and euros this week as the region’s common currency yesterday slipped to the lowest level in more than four years against the dollar. Gold touched a record $1,249.40 an ounce on May 14, while gold-backed exchange-traded fund holdings are near a peak.
“It shows low confidence in the euro zone,” said Bernard Sin, head of currency and metals trading at bullion refiner MKS Finance SA in Geneva. “There’s no confidence in euros, dollars and no confidence in other currencies. The only solution is to be on the safer side which is gold.”
Gold for immediate delivery added as much as $5.93, or 0.5 percent, to $1,246.18 an ounce and traded at $1,245.20 at 9:18 a.m. local time. Bullion for August delivery was 0.5 percent higher at $1,246.50 on the Comex in New York. Futures reached a record $1,249.70 on May 14.
Gold has advanced 14 percent this year as investors sought to safeguard their wealth against the crisis in Greece and other European countries struggling to repay debt. The metal may trade between $1,050 and $1,300 an ounce for the rest of this year and may climb to as much as $2,000 if the debt crisis spreads beyond Europe, possibly to the U.S., GFMS Chief Executive Officer Paul Walker said in an interview.
European equities halted a two-day slide and the euro steadied as Federal Reserve Chairman Ben S. Bernanke said Europe’s leaders are committed to avoiding a default and their bailout plan covers the obligations of Greece, Portugal and Spain “for a number of years.” The U.S. recovery is moving at a “moderate” pace, Bernanke said.
‘Safe-Haven Inflows’
“The gold price continues to be supported by safe-haven inflows, linked to Europe’s debt crisis and uncertainty about returns from alternative investment assets,” David Moore, commodity strategist at Commonwealth Bank of Australia, wrote in an e-mail today.
Holdings in the SPDR Gold Trust, the biggest ETF backed by bullion, gained 13 percent this year. The fund’s assets were unchanged at 1,286.36 metric tons yesterday, its website showed. They reached a record 1,289.84 tons on June 3.
Silver for immediate delivery in London added 1.2 percent to $18.3875 an ounce. Platinum rose 1.2 percent to $1,530 an ounce and palladium gained 0.7 percent to $434.88 an ounce.
To contact the reporters on this story: Kyoungwha Kim in Singapore at Kkim19@bloomberg.net; Nicholas Larkin at nlarkin1@bloomberg.net
