BLBG:Gold Jumps to Record in Longest Rally Since 2007
Gold rallied to an all-time high above $1,850 an ounce, poised for the longest run of weekly gains since April 2007, as escalating concern the global economy is slowing drove equities lower and spurred demand for a haven.
Immediate-delivery bullion advanced 1.6 percent to a record $1,852.75 an ounce and was at $1,851.23 at 3:17 p.m. in Singapore, up 6 percent this week. The metal is set for a seventh weekly advance as worse-than-expected U.S. economic data and Europe’s debt crisis boosted speculation growth will falter.
“Gold’s role as a safe haven will strengthen amid a slowing economic recovery, mounting debt-rollover needs in Europe and sharp market corrections,” said Cai Hongyu, an analyst at China International Capital Corp., the country’s biggest investment bank.
Asian stocks extended a global rout today after a Philadelphia-area manufacturing index sank to the lowest level since 2009, U.S. jobless claims rose, and existing home sales fell. Morgan Stanley and Deutsche Bank AG this week cut their forecasts for China’s growth, predicting that weaker expansions in the U.S. and Europe will hurt the country’s exports.
Sweden’s financial regulator said that lenders must do more to prepare for a worsening debt crisis in the region as the Wall Street Journal reported American regulators are intensifying scrutiny of the U.S. arms of Europe’s largest banks.
Gold, up 30 percent this year, is in the 11th year of a bull market, the longest winning streak since at least 1920, as investors seek to protect their wealth from declining equities, depreciating currencies and accelerating consumer prices.
Inflation Threat
“Medium term, the disorder of the global monetary system and long-term inflation threat will amplify gold’s nature as a currency and an inflation hedge,” said Cai.
The cost of living in the U.S. rose 0.5 percent in July from June, more than twice the 0.2 percent median forecast of economists surveyed by Bloomberg News. In China, inflation quickened last month to the fastest pace in three years.
The December-delivery contract climbed as much as 1.9 percent to a record $1,856.50 an ounce on the Comex in New York. Futures have jumped 6.3 percent this week. Gold in Swiss francs, South African rand, New Zealand and Canadian dollars and euros surged to all-time highs today. June-delivery gold on the Tokyo Commodity Exchange also rallied to its highest ever.
China Gold
Immediate-delivery gold of 99.95 percent purity on the Shanghai Gold Exchange, the benchmark cash contract, surged to a record 381 yuan ($59.56) a gram today, while bullion of 99.99 percent purity touched 381.50 yuan a gram, its highest ever. The metal for December delivery on the Shanghai Futures Exchange advanced for a fourth day, gaining as much as 3.7 percent to an all-time high of 383.89 yuan a gram.
“China will become an increasingly important driver in the gold market as renminbi internationalization advances and Chinese households investment demand increases,” said Cai.
China’s gold investment demand surged 44 percent in the second quarter from a year ago to 53 metric tons, the World Gold Council said yesterday. That was the second-largest after India. China’s jewelry demand gained 16 percent to 102.9 tons, it said.
Gold futures in India, the world’s biggest bullion consumer, also advanced to a record, gaining as much as 1.7 percent to 27,638 rupees ($604.14) per 10 grams on the Multi Commodity Exchange of India Ltd. Investment demand in India jumped 78 percent to 108.5 tons in the second quarter, while jewelry demand gained 17 percent to 139.8 tons, the World Gold Council said yesterday.
Indian households are adding to investment in gold to fight inflation, Ajay Mitra, managing director, Middle East and India for the council, said yesterday. Inflation in the country held above 9 percent for an eighth month in July.
Cash platinum climbed as much as 1.1 percent to $1,864.13 an ounce, the highest level touched since May 3. Spot silver gained as much as 1.5 percent to a two-week high of $41.20 an ounce. Palladium rose as much as 0.6 percent to $761.63 an ounce.
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
