BLBG: Gold May Gain, Near Record as Investors Seek `Insurance' Against Slowdown
Gold, trading little changed, may extend gains and approach a record as investors buy more to protect their wealth amid concern that the global economic recovery is faltering.
The metal touched a seven-week high yesterday and is headed for a third weekly climb, the best run since June, when the price surged to an all-time high. Holdings increased in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion.
“Investors are increasing the insurance-like metal in their portfolios,” said Lee Suk Jin, a commodities analyst at Seoul-based Tong Yang Securities Inc. “The short-term outlook for the economy is pretty uncertain,” said Lee.
Gold for immediate delivery was at $1,232.50 an ounce at 2:27 p.m. in Seoul, 35 cents higher. The price jumped to $1,237.50 yesterday after U.S. jobless claims climbed. That was the highest intraday level since July 1 and compares with the June 21 peak of $1,265.30.
“Economic conditions are more likely to increase gold prices than the other way around,” Peter Munk, chairman of Barrick Gold Corp., the world’s largest producer, said in an interview on Aug. 19. There was no reason to hedge against a possible decline in prices, Munk said.
Nineteen of 24 traders, investors and analysts surveyed by Bloomberg, or 79 percent, said that gold will gain next week. “There’s growing concern about the economic recovery,” said Mark O’Byrne, executive director of brokerage GoldCore Ltd.
Manufacturing Shrinks
Initial U.S. jobless claims in the week to Aug. 14 jumped to the highest level since November, Labor Department data showed, while manufacturing in the Philadelphia region shrank for the first time in a year. Asian equities declined today.
Gold has climbed 12 percent this year, heading for a tenth annual gain and outperforming equities, on signs that global growth may be losing momentum. December-delivery futures dropped 0.1 percent to $1,234.30 an ounce on the Comex in New York.
Holdings in the SPDR Gold Trust gained 3.95 metric tons to 1,299.47 tons as of Aug. 19, according to the company’s website. Holdings are 1.6 percent less than of June’s record.
Silver for immediate delivery was little changed at $18.3175 an ounce. Platinum dropped 0.7 percent to $1,516 an ounce, while palladium declined 0.6 percent to $481.60 an ounce.
To contact the reporter on this story: Sungwoo Park in Seoul at spark47@bloomberg.net.
