Gold rose to a record in New York and London as a weaker dollar and concerns about inflation and European debt boosted demand for the metal as an alternative investment. Silver climbed above $40 an ounce to a 31-year high.
The European Central Bank yesterday lifted interest rates for the first time in almost three years to quell inflation even as Portugal sought a bailout. The dollar slid to the lowest level since December 2009 against six major currencies. Gold, which typically moves inversely to the greenback, has climbed on fighting in Libya and Japan’s earthquake and tsunami last month.
“Inflation expectations are rising,” Walter de Wet, an analyst at Standard Bank Plc in London, said today by phone. European debt issues are “certainly adding support. Most of the rally the past few days has been on the back of the dollar weakening.”
Gold futures for June delivery gained as much as $15.20, or 1 percent, to $1,474.50 an ounce and traded at $1,472.80 by 8 a.m. on the Comex in New York. Prices are up 3.1 percent this week, the most since December. The metal for immediate delivery in London was 0.9 percent higher at $1,471.56 after reaching $1,473.07.
Gold futures reached a record 21,320 rupees ($483.70) per 10 grams (0.3 ounce) on the Multi Commodity Exchange of India Ltd. The country is the biggest gold consumer.
Libyan Stalemate
U.S. Army General Carter Ham, who commanded the opening phase of the allied military operation in Libya, yesterday said the overall conflict is settling into a stalemate between regime forces and rebel fighters. North Atlantic Treaty Organization commanders are deploying more warplanes in their effort to halt forces loyal to Muammar Qaddafi.
The difference between yields on U.S. 10-year notes and Treasury Inflation Protected Securities, a gauge of trader expectations for inflation, widened to as much as 2.62 percentage points, the most in 33 months.
“Geopolitical risk in the Middle East and Africa, deepening inflation and the Black Swan risk of natural disasters” is boosting precious metals, GoldCore Ltd. analysts in Dublin said in an e-mail. “The gold and silver markets are experiencing a perfect storm. Debt concerns in the euro zone and in the U.S.” are supporting prices, the analysts said.
President Barack Obama said he hopes lawmakers can reach a last-minute deal today to avert a government shutdown after a third round of talks with congressional leaders last night failed to end an impasse over the federal budget.
Japan’s biggest aftershock since the March 11 earthquake yesterday left two dead and millions without power in the areas hit hardest by last month’s tsunami. The magnitude-7.1 temblor hindered efforts by Tokyo Electric Power Co. to prevent hydrogen explosions at its Fukushima Dai-Ichi nuclear plant.
Silver Surges
Silver for May delivery in New York climbed as much as 2 percent to $40.335 an ounce, the highest level since January 1980, the year futures reached a record $50.35. It last traded at $40.29. An ounce of gold bought as little as 36.48 ounces of silver in London today, the least since September 1983, data compiled by Bloomberg show.
Silver held in exchange-traded products rose 27.57 metric tons to 15,423.09 tons yesterday, the highest level since at least February 2010, data compiled by Bloomberg from four providers show.
Investors perceive silver as “a cheap vehicle with characteristics similar to gold as a store of value,” Morgan Stanley said in a report to clients today. The metal will average $31.39 an ounce this year, up 20 percent from a previous forecast, the bank said.
Palladium for June delivery was up 2.7 percent at $801.35 an ounce after touching a one-month high of $804. Platinum for July delivery gained 1.6 percent to $1,818.70 an ounce. It earlier today reached $1,822.10, the highest price since March 7.
Source: Bloomberg By
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