Gold climbed on speculation that European governments may struggle to pay debt, which boosted demand for the precious metal as an alternative to currencies. Gold for immediate delivery gained 0.2 percent to $1,395.20 an ounce at 12:24 p.m. in Seoul. The metal reached to an all- time high of $1,424.60 an ounce yesterday on concern that Ireland and Greece will struggle to repay bondholders, and spending cuts may stifle growth in the region. Earlier this year, gold advanced amid concern that Greek government may default. “Paper money is being printed and printed, but there’s no other alternative,” said C.S. Oh, head of overseas futures team at NH Investment & Futures Co. in Seoul. “There’s no change to the fundamentals in the gold market. The dollar looks a bit stronger now, but it’s poised to weaken in the long term.” The Dollar Index, which tracks the greenback’s strength against six counterparts, has fallen 1.1 percent since Oct. 1, while gold has gained 6.6 percent. Bullion typically moves inversely to the U.S. currency. The metal has gained 27 percent this year, heading for the 10th straight annual gain. Governments have spent trillions of dollars to bolster their economies, driving the value of currencies lower. Last week, the Federal Reserve said it will buy an additional $600 billion of Treasuries through June. Gold for December delivery dropped 1.1 percent to $1,394.40 an ounce on the Comex in New York after reaching a record $1,424.30 yesterday. No Gold Standard Currency tensions may increase protectionism, World Bank President Robert Zoellick told reporters in Singapore today, adding that he doesn’t see a currency war developing. Zoellick also said he’s not advocating a return to the gold standard. There is “some sense” in using gold as tool to guide monetary authorities in the U.S., said Dennis Gartman, an economist and the editor of the Suffolk, Virginia-based Gartman Letter. “We are not proponents of a gold standard,” Gartman said yesterday in his daily note. The metal could be used “as a target, as a guide-post, as a compass.” Silver for immediate delivery gained 0.8 percent to $27.1362 an ounce. The metal fell yesterday as much as 4.5 percent after reaching $29.36, the highest price since March 1980, as CME Group Inc.’s Comex unit raised margin requirements. The minimum amount of cash that traders must deposit when borrowing from brokers to trade silver futures will rise to $6,500 per contract from $5,000 for exchange members, Michael Shore, a spokesman for the exchange in Chicago, said yesterday. Spot palladium fell 0.8 percent to $687 an ounce, while platinum was little changed at $1,759.25 an ounce. To contact the reporters on this story: Sungwoo Park in Seoul at spark47@bloomberg.net; Jae Hur in Tokyo at jhur1@bloomberg.net To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

Source