BLBG:Gold Extends Advance to Near Two-Week High on Stimulus Optimism
Gold advanced for a third day toward a two-week high as expectations that global policy makers will need to stimulate growth boosted demand for a store of value. Platinum was set for the longest rally in four months.
Spot gold gained as much as 0.3 percent to $1,684.89 an ounce and traded at $1,684.37 at 2:58 p.m. in Singapore. The metal reached $1,685.25 yesterday, the costliest since Jan. 3, after U.S. Federal Reserve Chairman Ben S. Bernanke said the previous day that while the U.S. economy is responding to monetary stimulus there is still “quite a ways to go.”
The World Bank cut its global growth forecast to 2.4 percent from 3 percent. A battle still looms in the U.S. over raising the $16.4 trillion debt limit and on automatic spending cuts, known as sequestration. Since 1960, Congress has raised or revised the debt limit 79 times, including 49 times under Republican presidents, according to the Treasury Department.
“In the short term, the combination of weaker growth and the run up to the debt ceiling and potential budget sequestration should prove supportive to gold prices,” Goldman Sachs Group Inc. analysts wrote in a report today. “Medium term, however, improving U.S. growth will outweigh further Fed balance-sheet expansion and that the cycle in gold prices will likely turn in 2013.”
Gold rallied 7.1 percent in 2012 as central banks around the world took steps to boost their economies. The Fed’s Bank of Boston President Eric Rosengren said yesterday that the central bank could still enlarge its $85 billion monthly purchases of bonds if policy makers are not making progress toward their twin goals of stable prices and full employment.
Global Growth
Gold for February delivery was little changed at $1,683.70 an ounce on the Comex in New York. The World Bank trimmed its forecasts yesterday as government spending cuts, joblessness and low business confidence dragged on developed economies.
Spot platinum gained as much as 0.2 percent to $1,686.67 an ounce, reversing a 0.9 percent decline, as Anglo American Platinum Ltd. (AMS) miners downed tools to protest job cuts. The metal is up for a seventh day, the longest such advance since September. Prices jumped to a three-month high yesterday and exceeded gold’s for the first time since April after the world’s largest producer said it plans to reduce jobs and output.
Cash palladium climbed 0.7 percent to $715.45 an ounce, rising for third day. The price touched a 10-month high of $720.95 yesterday.
Silver gained 0.1 percent to $31.41 an ounce. Assets in exchange-traded products backed by the metal stood at an all- time high of 19,064.83 metric tons yesterday.
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
