BLBG: Gold Near Record as Investors Seek Haven From Dollar Weakness
By Glenys Sim
Nov. 11 (Bloomberg) -- Gold traded within 0.2 percent of its record in Asia as the dollar fell for a third day, driving investors to buy bullion to preserve their wealth. The metal jumped to a record in Shanghai.
Gold futures climbed for an eighth straight day, heading for the longest rally since the period ending Jan. 4, 2006, after the Dollar Index, a gauge of the greenback’s value against six major currencies including the euro and yen, tumbled to a 15-month low today. Spot gold has risen 26 percent this year, heading for a ninth annual gain, the longest winning streak since at least 1948, as the index slumped 7.8 percent.
“The real thing is what’s the value of paper money, and 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,” said John Hathaway, managing director of Tocqueville Asset Management LP.
Gold for immediate delivery rose as much as 0.3 percent to $1,108.95 an ounce, before trading little changed at $1,106.20 at 9:35 a.m. Singapore time. The metal reached an all-time high of $1,111.20 an ounce Nov. 9.
Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, were unchanged at 1,114.44 metric tons yesterday, after climbing the most in a month on Nov. 9.
December-delivery gold on the Comex division of the New York Mercantile Exchange added as much as 0.6 percent to $1,109.20 an ounce, 0.2 percent less than its Nov. 9 record of $1,111.70. June-delivery gold in Shanghai gained as much as 0.7 percent to 242.64 yuan a gram ($1,106 an ounce), the highest price since futures started trading in January 2008.
‘Hard Time’
“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.”
Governments worldwide including the U.S. 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.
India’s central bank last week bought 200 tons of gold from the International Monetary Fund for $6.7 billion, prompting analysts at Bank of America Merrill Lynch, Societe Generale and Barclays Capital to forecast further central bank buying. Central banks are the biggest holders of gold.
“Central banks are net buyers today and as long as the dollar is a huge issue as I think it will remain, central banks will be buyers,” said Hathaway.
Among other precious metals for immediate delivery, silver rose 0.2 percent to $17.375 an ounce, platinum gained 0.4 percent to $1,357.50 an ounce, while palladium was unchanged at $333.75 an ounce as of 10:02 a.m. in Singapore.
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
