Gold futures surged to a record $1,829.70 an ounce on demand for an investment haven as mounting concern that the global economy is faltering triggered a plunge in equities. The Standard & Poor’s 500 Index tumbled as much as 5 percent after manufacturing in the Philadelphia region unexpectedly contracted in August by the most in two years as orders plunged and factories shed workers. Europe’s debt crisis may freeze interbank markets and cut off funding, said Lars Frisell, the chief economist at Sweden’s financial regulator. “There is further decay in the European situation,” Sterling Smith, an analyst at Country Hedging Inc., said in a telephone interview from St. Paul, Minnesota. “The nervousness in the equity markets is pushing people toward gold.” Gold futures for December delivery jumped $28.20, or 1.6 percent, to settle at $1,822 at 1:45 p.m., on the Comex in New York, closing at an all-time high for the third straight day. The price has advanced 28 percent in 2011, after posting gains in the previous 10 years. “If gold continues to climb at this rate for the next few days, we may touch $2,000 by the end of this month,” Smith said. At the end of July, gold settled at $1,631.20. Morgan Stanley cut its forecast for global growth this year, citing an “insufficient” response to Europe’s debt crisis and the prospect of fiscal tightening. ‘Inflationary Pressures’ “A developed world with slower growth, a large fiscal deficit and near zero rates over the next few years, inflationary pressures in emerging economies, and larger political and economic uncertainty bodes well” for gold, Roxana Mohammadian-Molina, an analyst in London at Barclays Capital, said in a report. Holdings of the metal in exchange-traded products rose 10.8 tons yesterday, the most since Aug. 8, to 2,198.7 tons, data compiled by Bloomberg show. Assets reached a record 2,216.8 tons last week as Standard & Poor’s cut the credit rating of the U.S. Venezuelan President Hugo Chavez ordered the country’s central bank to repatriate $11 billion of gold reserves held in developed nations’ institutions. Venezuela’s move “suggests a lack of comfort with holding gold abroad,” Edel Tully, an analyst at UBS AG in London, said in a report. “This is another central bank that wants gold to play a greater role in its international reserves.” Silver futures for December delivery rose 33.8 cents, or 0.8 percent to $40.716 an ounce on the Comex. The metal has gained 32 percent this year. On the New York Mercantile Exchange, palladium futures for September delivery fell $18.90, or 2.4 percent, to $757 an ounce, the biggest decline for a most-active contract since Aug. 4. Platinum futures for October delivery advanced $6.90, or 0.4 percent, to $1,847.70 an ounce. That marked the ninth straight gain, the longest rally since October 2007. To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Debarati Roy in New York at droy5@bloomberg.net To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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