BLBG: Gold May Gain in London as Recovery Concerns Increase Demand
By Nicholas Larkin and Kim Kyoungwha
June 23 (Bloomberg) -- Gold, little changed in London, may gain for a second day as concern that the economic recovery will falter spurs demand for the metal as a means to protect wealth.
European and Asian equities declined for a second day after a U.S. report yesterday showed sales of previously owned homes unexpectedly fell in May. Purchases of new houses plunged last month, analysts forecast data to show today. Bullion climbed to a record $1,265.30 an ounce on June 21.
“The market is still jittery,” said Bernard Sin, head of currency and metals trading at bullion refiner MKS Finance SA in Geneva. “Weakness in equities may continue to support gold. Gold will continue to be bullish.”
Gold for immediate delivery added $1.40, or 0.1 percent, to $1,241.45 an ounce at 9:16 a.m. in London. The metal for August delivery was 0.1 percent higher at $1,242.20 on the Comex in New York.
Investors have amassed gold as the sovereign debt crisis in Europe fanned demand for safer assets, prompting a 13 percent gain in prices this year and a 16 percent increase in holdings in the world’s biggest exchange-traded fund backed by bullion. The metal is headed for a 10th consecutive annual gain, the longest winning streak since at least 1920.
“Gold is still looking well bid on its unique safe-haven status,” said Peter Tse, head of precious metals with Bank of Nova Scotia in Hong Kong. “However, the market is heavily long and we could see some profit-taking,” he said, referring to bets that prices will rise.
Currency Concerns
Holdings in the SPDR Gold Trust, the biggest gold-backed ETF, increased 5.17 metric tons to a record 1,313.13 tons yesterday, according to the company’s website. Global holdings of the metal by ETFs rose 6.2 tons to 2,050.6 tons yesterday, according to Bloomberg data from 10 providers.
“Fiat currency concerns relating to the European sovereign debt crisis and excess liquidity should be positive for gold” this year, Morgan Stanley said today in a report. Prices may average $1,201 an ounce this year, up from a previous estimate of $1,159, the bank said.
Silver for immediate delivery in London added 0.1 percent to $18.8375 an ounce. Platinum lost 0.7 percent to $1,573.45 an ounce, and palladium was down 0.2 percent at $482.85 an ounce.
To contact the reporters on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net; Nicholas Larkin in London at nlarkin1@bloomberg.net.
