BLBG: Gold Advances as Allies Attack Libyan Targets, Driving Energy Costs Higher
Gold climbed for a fourth day as allied aircraft began to enforce a no-fly zone over Libya, driving energy prices higher and boosting demand for the metal as a haven. Silver extended its biggest gain in two weeks.
Immediate-delivery bullion advanced as much as 0.8 percent to $1,429.63 an ounce and traded at $1,429.33 at 12:04 p.m. in Singapore. Cash silver jumped 2 percent to $35.9563 an ounce, after rising 2.9 percent on March 18, the most since March 4.
Allied officials said the attacks by the U.S., U.K., Italy and France have grounded Muammar Qaddafi’s air force and driven back his offensive against the rebel stronghold at Benghazi. Tomahawk missiles were fired at Libyan targets and fighter jets patrolled the skies. Oil in New York rose as much as 2.1 percent.
“Geopolitical tensions in Libya lifted safe-haven demand,” Mark Pervan, head of commodity research at ANZ Banking Group Ltd., wrote in a note today. Gold, little changed this year, reached a record $1,444.95 an ounce on March 7.
“The G-7’s coordinated intervention aimed at weakening the Japanese currency also aided the euro’s ascent against the dollar,” Pervan wrote, benefitting gold. The metal tends to move counter to shifts in the U.S. currency.
Group-of-Seven nations last week vowed to curb gains in the yen that reached a postwar high, endangering Japan’s recovery from its biggest temblor. The Dollar Index, a six currency gauge of the dollar’s value, fell 0.2 percent today as the euro rose to 114.76 yen from 114.31, and was at $1.4170 from $1.4182.
‘Bullish Flag’
Eleven of 17 traders, investors and analysts surveyed by Bloomberg, or 65 percent, said bullion will rise this week. Four predicted lower prices and two were neutral. Bullion assets held in exchange-traded products or ETPs, rose for a second day to 2,030.305 tons as of March 18. Holdings reached a record 2,114.60 tons on Dec. 20.
“Increasingly it appears that gold is building a bullish flag,” Jordan Kotick, global head of technical strategy with Barclays Capital Inc., wrote in a report today. “We suspect there will still be opportunities to buy dips within a $1,390- to-$1,430 range. Closing above $1,435 is needed to confirm new highs through to $1,445 and $1,530.”
Gold’s 14-day relative strength index, a gauge of whether a commodity is overbought or oversold, rose for a fourth day to 59.259 today. A reading above 70 is viewed by some analysts as a signal that price may decline.
Palladium for immediate delivery strengthened 0.6 percent to $735.50 an ounce, while platinum increased 0.4 percent to $1,729.45 an ounce.
To contact the reporter on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
