By Claudia Carpenter and Millie Munshi Dec. 1 (Bloomberg) -- Gold rose to a record above $1,200 an ounce in New York trading as a weaker dollar, rising government debt and concern over Iran’s nuclear program spurred investors to seek a haven. The U.S. Dollar Index, which measures the greenback’s value against six currencies, fell for a second consecutive day. The precious metal advanced 35 percent this year, more than the MSCI World Index of shares and U.S. Treasuries, and is heading for its biggest annual gain since 1979. Investors are buying gold because of “inflation for the longer term and a dollar play for those with a short to medium view,” James Moore, an analyst at TheBullionDesk.com in London, said by phone. “The market has performed well and that tends to attract funds and investors.” The Federal Reserve has kept benchmark interest rates near zero since December in a bid to revive lending after the worst financial crisis in seven decades. The U.S. government has boosted spending to a record to combat the recession. Gold futures for February delivery advanced as much as $18.20, or 1.5 percent, to $1,200.50 an ounce on the New York Mercantile Exchange’s Comex division. Gold for immediate delivery climbed $15.40, or 1.3 percent, to $1,195 an ounce as of 10 a.m. in London. Demand for bullion has increased among investors and governments. The U.S. Mint has suspended sales of most American Eagle coins made from precious metals including gold and silver, citing depleted inventories of the metals after sales surged 88 percent in the first 10 months of this year. Nuclear Program Concern over Iran’s nuclear program is another factor in gold’s advance, Michael Guido, director of hedge-fund sales at Macquarie Capital USA Inc. in New York, said in a note yesterday. The U.K. government said Iran is holding five British nationals after their yacht possibly strayed into Iranian waters in the Persian Gulf last week. The incident comes as the U.S., Britain and other European allies condemn Iran’s plan to expand its nuclear program in defiance of United Nations sanctions. Some investors buy gold as a haven in times of geopolitical tension. Hedge-fund managers and other large speculators increased their net-long position, or bets on higher New York gold futures, to the highest since at least 1993, according to a report yesterday from the U.S. Commodity Futures Trading Commission. The net long was 262,331 contracts as of Nov. 24, up 11 percent from a week earlier, according to the report. Among other precious metals, silver climbed 1.5 percent to $18.75 an ounce and platinum rose 1.2 percent to $1,471 an ounce. Palladium jumped as much as 4.2 percent to $381.25 an ounce, the highest compared with intraday prices since July 31. To contact the reporters on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net; Millie Munshi in New York at mmunshi@bloomberg.net.

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