Oct. 8 (Bloomberg) -- Gold gained to a record for a third day in London and New York as demand increased on a weakening dollar and concern that inflation will accelerate. Bullion will probably top $2,000 an ounce in the next decade, according to investor Jim Rogers. The U.S. Dollar Index, a six-currency gauge of the greenback’s value, slipped to a two- week low as signs of a global economic recovery boosted demand for higher-yielding assets. The measure has shed 6.5 percent this year as bullion heads for a ninth annual gain. Silver and palladium rose to the highest prices in more than a year. “More and more people are concerned that there’s more risk of inflation, rather than deflation,” Jesper Dannesboe, a senior commodity strategist at Societe Generale SA in London, said today by phone. “That’s one of the main drivers. Of course, there’s the risk that the dollar will keep falling.” Immediate-delivery bullion advanced as much as $14.28, or 1.4 percent, to $1,058.48 an ounce, and was at $1,054.45 by 9:35 a.m. in London. December gold futures were 1 percent higher at $1,055.10 an ounce on the New York Mercantile Exchange’s Comex division after climbing as high as $1,059.60. “People are printing money, gold is going up,” Rogers said in an interview on Bloomberg Television, adding that he may increase his holdings. “There are plenty of reasons to buy gold when the time is right.” ‘Smart People’ President Barack Obama has increased U.S. marketable debt to a record as he borrows to reignite growth in the world’s biggest economy. That’s boosted speculation the increased money supply may debase the currency and spur inflation. The printing of money and “abandonment of the dollar have taken the smart people over to precious metals,” according to Philip Gotthelf, president of Equidex Brokerage Group Inc. Spot gold’s 14-day relative strength index, a gauge of whether a commodity or security is overbought or oversold, has increased to 74.41. That’s above the level of 70 viewed by some investors as an indication of an impending decline. “Gold may be temporarily overbought,” Peter Richardson, Morgan Stanley’s chief metals economist in Melbourne, said today in a report. Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, increased 8.8 metric tons to 1,109.31 tons as of Oct. 7, according to figures on the company’s Web site. The fund’s holdings reached an all-time high of 1,134 tons on June 1. Currency Hedge The metal “has moved higher on safe-haven buying,” said Ben Westmore, an energy and minerals economist at National Australia Bank Ltd. “A lot seems to do with fund activity, but there is definitely downside possibility to gold ahead.” Surging gold prices are a signal that investors are buying metals to hedge against declining currencies, according to former Federal Reserve Chairman Alan Greenspan. Gains for commodities demonstrate a “move away from paper currencies,” he said last month. To be sure, gold’s allure may decline as investors’ appetite for risk rises, said Westmore. The metal may also drop because the dollar might not have “too much more downside” and inflation may not be a “big issue,” he said. Among other precious metals, silver climbed as much as 1.9 percent to a 14-month high of $17.905 an ounce, and was last at $17.77. Palladium, the best-performing precious metal this year, added 0.4 percent to $314 an ounce after earlier reaching $317.75, the highest in almost 14 months. Platinum rose 1 percent to $1,340 an ounce. Silver held in ETF Securities Ltd.’s exchange-traded products fell 2.4 percent to 20.467 million ounces yesterday, according to the company’s Web site. Platinum holdings added 0.6 percent to 370,573 ounces, while gold and palladium assets were little changed. To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Kyoungwha Kim in Singapore at kkim19@bloomberg.net.

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