By Glenys Sim Nov. 12 (Bloomberg) -- Gold futures advanced to a record, rising for a ninth consecutive day in the best winning run since 1982, on speculation that central banks and investors will step up purchases as the dollar extends a slump. The December-delivery contract on the Comex division of the New York Mercantile Exchange rose as much as 0.7 percent to $1,122.30 an ounce. Spot gold advanced for a fifth day, also to an all-time high. Investor Marc Faber said gold wouldn’t again trade at less than $1,000. Shares of producers surged. “Gold looks to be on target to hit $1,300 before the end of the year,” said Wallace Ng, Hong Kong-based chief dealer at Fortis Bank’s commodity-derivatives unit. “It will still be the dollar in the driving seat.” Gold priced in dollars tends to move in the opposite direction to the U.S. currency. Gold futures have risen about 27 percent this year, heading for a ninth annual gain, as the Dollar Index tumbled 7.8 percent. The currency has dropped on record-low U.S. interest rates and increased government borrowing to combat recession in the world’s top economy. “We will not see less than the $1,000 level again,” Faber said at a conference yesterday. “Central banks are all the same. They are printers. Gold is maybe cheaper today than in 2001, given the interest rates. You have to own physical gold.” To be sure, the metal remains below its nominal high after accounting for inflation. Spot gold’s $850 an ounce peak in 1980 is equivalent to $2,227.84 today after adjusting for changes in prices, according to the U.S. Labor Department’s inflation calculator. Gold priced in Australian dollars is also 22 percent below its record of about A$1,542.28 an ounce, and the metal in euros is 4.7 percent off its peak, both reached in February. India, Sri Lanka News last week of bullion purchases by the Indian and Sri Lankan governments has raised speculation other countries will follow suit. Analysts at Bank of America Merrill Lynch, Societe Generale SA and Barclays Capital have forecast further purchases by central banks, already the biggest holders. December-delivery gold traded at $1,120.80 an ounce at 12:11 p.m. Singapore time, in the longest winning streak since the nine days ending Aug. 26, 1982, according to Bloomberg data. Spot gold advanced as much as 0.4 percent to $1,122 an ounce. The dollar traded near a two-week low against the euro today before a report tomorrow that is forecast to show Europe’s economy expanded last quarter, damping demand for the U.S. currency. “The dollar is firmly in a downtrend,” said Takeshi Tokita, vice president of foreign-exchange sales at Mizuho Corporate Bank Ltd. in Tokyo. Producers Rally Newcrest Mining Ltd., Australia’s biggest producer, gained 2 percent to A$36.02, Lihir Gold Ltd. rose 2.6 percent to A$3.50 and Sino Gold Mining Ltd. added 2.1 percent at A$7.75 at 12:28 p.m. Sydney time on the Australian stock exchange. Newmont Mining Corp. Chief Executive Officer Richard T. O’Brien said yesterday that $900 an ounce will act as a floor for the price. Shares in the largest U.S. producer of the metal have more than doubled over the past year The U.S. currency fell to $1.5001 per euro at 11:52 a.m. in Tokyo from $1.4987 in New York yesterday, when it touched $1.5048, the lowest level since Oct. 26. Gross domestic product in the 16-nation euro region expanded 0.5 percent in the third quarter from the second quarter, when it fell 0.2 percent, a Bloomberg News survey of economists showed. The European Union will release the report tomorrow. “The U.S. dollar’s direction will continue to drive gold prices in the near term,” James Steel, HSBC Securities analyst, wrote in a note e-mailed to clients today. To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net

Source