Gold Climbs to Five Month High...
Gold Climbs to Five-Month High on Demand for Money Alternative
May 4 (Bloomberg) -- Gold futures climbed to a five-month high in New York onsigns of increased demand for the metal as an alternative to the euro and othercurrencies.
Bullion rose to records in euros, Swiss francs and British pounds, extendinggains this year as concern about sovereign debts in Europe spurred investors toseek a hedge. Government workers in Greece, which is being bailed out by theEuropean Union and the International Monetary Fund, began the first day of a48-hour strike against budget cuts.
“Gold is incorporating a premium due to currency and default risk,” said Bayram Dincer, an analyst at LGT Capital Management inPfaeffikon, Switzerland. “There is a high risk aversion among gold investors,and it’s all about safe haven.”
Gold futures for June delivery rose as much as $7.40, or 0.6 percent, to$1,190.70 an ounce, the highest intraday price since Dec. 4, on the Comex in NewYork. The metal was at $1,187.30 at 8:23 a.m. local time. Immediate-deliverybullion advanced 0.5 percent to $1,187.60 in London.
Prices in dollars are still 3.3 percent below the record $1,227.50 an ounceon Dec. 3. That signals more confidence in the dollar than European currenciesor the yen, Dincer said. Gold has gained 8.3 percent this year in dollars, 9.9percent in yen, 14 percent in Swiss francs, 15 percent in sterling and 18percent in euros.
Higher ‘Fixing’
Gold rose to $1,184.25 an ounce in the morning “fixing” in London, used bysome mining companies to sell production, from $1,179.25 at the afternoon fixingon April 30. No fixing took place yesterday, when U.K. financial markets wereclosed for a national holiday.
Bullion will trade at $1,100 an ounce in six months and $1,050 in a year,below previous forecasts of $1,250 and $1,175, Robin Bhar, an analyst at Credit Agricole Corporate &Investment Bank in London, said in a report today.
Greek state workers escalated protests against 30 billion euros ($40 billion)of additional wage cuts and tax increases. The country’s prime minister hascalled on citizens to endure more sacrifices in return for an EU-IMF loanbailout before debts come due this month. Officials reached agreement over theweekend on a rescue plan.
“Early indications are that it should be reasonably constructive for riskassets and provide some temporary relief, at least, for the beleagueredhigh-yielding European bond markets and the euro,” Bhar said of the bailoutaccord.
IMF Reserves
Concern about sovereign debt issues is driving investor demand for gold,according to Eliane Tanner, an analyst at Credit Suisse Group AG in Zurich.
The IMF’s gold reserves declined by 18.5 metric tons (about 595,000 ounces)in March following the sale of 5.6 tons of metal in February, according to theWorld Gold Council.
Platinum for July delivery dropped 0.7 percent to $1,716.70 an ounce andpalladium for June delivery fell 1.9 percent to $537.95 an ounce on the New YorkMercantile Exchange. Both are used in catalysts to reduce harmful exhaust fumesfrom vehicles. New-car registrations in Germany dropped 32 percent in April froma year earlier, according to the German Automobile Industry Association.
July silver futures declined 0.6 percent to $18.72 an ounce.
To contact the reporters on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net.
Last Updated: May 4, 2010 08:39EDT