Back to Gold Commentary
Wednesday, November 11, 2009
|
Bloomberg.com
Gold rose to a record in New York and London as the dollar fell for a third day, spurring demand for the metal as a hedge against further weakness.
The Dollar Index
, a six-currency gauge of the greenback’s performance, slipped as much as 0.3 percent to a 15-month low. Gold futures jumped 5.5 percent in the past month as the currency index lost 1.7 percent and as news last week of bullion purchases by the Indian and Sri Lankan governments raised speculation that other countries would follow suit.
“The dollar has been weakening,” said Bernard Sin , head of currency and metals trading at bullion refiner MKS Finance SA in Geneva. “The market is also concerned about central banks’ interest in buying gold. We would not be surprised to see the market testing $1,200” an ounce by the end of the year.
December gold futures climbed for an eighth session on the New York Mercantile Exchange’s Comex division, rising as much as $16.10, or 1.5 percent, to $1,118.60 an ounce. They were at $1,114.50 by 8:28 a.m. local time. Immediate-delivery bullion gained as much as 1.1 percent to $1,117.82 an ounce in London and last traded at $1,114.57.
The metal advanced to a record $1,114.75 an ounce in the morning “fixing” in London from $1,101.50 at yesterday’s afternoon fixing. Some mining companies use fixings to sell production. Spot prices are up 27 percent this year and heading for a ninth annual gain, the longest winning streak since at least 1948.
U.K. Inflation
The Bank of England today raised its forecast for economic growth and said inflation may exceed the 2 percent target in 2012 even if policy makers start increasing interest rates from a record low. “The outlook for inflation in the medium term is somewhat higher than in the August report,” the bank said as it published its quarterly predictions.
“What’s the value of paper money?” said John Hathaway , managing director at New York-based Tocqueville Asset Management LP and manager of the Tocqueville Gold Fund. “Frankly, it depends on what happens in the next three years to the efforts of the Federal Reserve and other world central banks to bring about an economic recovery.”
Governments in the U.S. and other nations have cut interest rates and boosted spending to fight the worst recession since World War II, spurring some investors to buy bullion as a hedge against potential inflation and currency debasement.
Indian Purchase
“Would they be able to retract the liquidity they put into place?” Hathaway said in a Bloomberg Television interview today. “If they have a hard time doing it, I think we’ll see inflation and gold will go much higher.”
India’s central bank last month bought 200 metric tons of gold from the International Monetary Fund for $6.7 billion. That prompted analysts at Bank of America Merrill Lynch, Societe Generale SA and Barclays Capital to forecast further purchases by central banks, the biggest owners of gold.
Vietnam will allow some companies to resume gold imports to stop prices from rising excessively, the country’s central bank said today. Domestic bullion prices have gained on concern that the government may be forced to devalue the dong. The Southeast Asian nation banned imports in June 2008 to help narrow the trade deficit.
Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, were unchanged at 1,114.44 tons yesterday after climbing the most in a month on Nov. 9. Gold held in ETF Securities Ltd. ’s exchange-traded products added 0.2 percent to 7.953 million ounces yesterday, its Web site showed.
Silver for December delivery in New York climbed 2.5 percent to $17.655 an ounce. Platinum for January delivery gained 1.7 percent to $1,373.90 an ounce, while palladium for December delivery was 1.1 percent higher at $339 an ounce.
ETF Securities’ silver holdings rose 0.9 percent to a record 21.665 million ounces yesterday, its Web site showed. Platinum assets climbed 2.5 percent to 395,721 ounces.
Source: Bloomberg.com