By Nicholas Larkin and Wendy Pugh Sept. 15 (Bloomberg) -- Gold may extend yesterday’s rally to a record as investors seek protection against turmoil in the global economy and financial markets. Silver was little changed after climbing to the highest price since March 2008. Gold reached a record $1,274.95 yesterday as holdings in the world’s biggest gold-backed exchange-traded fund gained the most in almost a month. The yen tumbled from a 15-year high versus the dollar after Japan’s government intervened for the first time since 2004 to curb gains that threaten an export-led recovery. The dollar was little changed against the euro. “The volatility in currencies has led to consolidation in gold,” said James Moore, an analyst at TheBullionDesk.com in London. “While a brief pause is expected as traders and investors lock in profits, we expect further gains with diversification and technical buying to drive gold toward $1,300.” Immediate-delivery bullion added $2.38, or 0.2 percent, to $1,270.53 an ounce at 9:14 a.m. in London. Prices rose 1.8 percent yesterday, the most in four months. Gold for December delivery was little changed at $1,272.20 on the Comex in New York. Japan’s currency slid the most since December after Finance Minister Yoshihiko Noda said the nation unilaterally sold yen. The dollar yesterday slipped to a one-month low against the euro. Gold usually moves inversely to the U.S. currency. The metal is set for a 10th annual gain. Prices rallied to a record as investors sought protection against financial turmoil in Europe and the prospect of slowing economic growth. Gold, traditionally a hedge against rising consumer prices, advanced 16 percent since the start of January even as U.S. inflation slowed. ‘Extra Impetus’ Inflation expectations, based on the 10-year U.S. Treasury breakeven rate, have fallen to 1.79 percent from 2.2 percent six months ago. Gold holdings in the SPDR Gold Trust, the biggest ETF backed by bullion, gained 6.08 metric tons to 1,298.70 tons yesterday, according to the company’s website. That’s the biggest daily increase since Aug. 17. Holdings reached a record 1,320.44 tons in June. The precious metal may climb toward $1,350 this year as investment demand exceeds jewelry use for a second year, London- based researcher GFMS Ltd. said yesterday. “Investment will be given an extra impetus if we see another worsening of the sovereign-debt crisis in Europe, which is reasonably possible, and if we see concerns growing in the U.S.,” GFMS Chairman Philip Klapwijk said in an interview from New York. Low interest rates and possible further quantitative- easing by the Federal Reserve would also support gold, he said. Silver Gains The Fed and the European Central Bank have kept benchmark lending rates at the lowest level ever to revive economic growth. The U.S. central bank last month restarted direct purchases of Treasuries, also known as quantitative easing. The Fed first resorted to buying bonds as part of its response to the world financial crisis. “Gold and silver are moving higher because of the uncertainty in the economic conditions,” Ng Cheng Thye, Singapore-based director with Standard Merchant Bank Ltd., said by phone today. Rallies in platinum and palladium yesterday also supported bullion and may drive further climbs, he said. Silver for immediate delivery in London added as much as 0.3 percent to $20.535 an ounce, the highest price since March 2008, and was last little changed at $20.4775. The metal is up 21 percent this year. Platinum earlier today climbed to $1,604.38 an ounce, the highest level since Aug. 3, and was last down 0.1 percent at $1,591.50. It gained 2.5 percent yesterday, the most since May 27. Palladium lost 0.1 percent to $552.25 an ounce after earlier today reaching $555.25, the highest price since April 30. Prices yesterday jumped 3.9 percent, also the most since May 27. --With assistance from Jae Hur in Tokyo. Editors: John Deane, Dan Weeks. To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Wendy Pugh in Melbourne wpugh@bloomberg.net. To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.

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