Gold Advances to Record as Platinum Climbs

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One thousand gram gold bars are arranged for a photograph at the Istanbul Gold Refinery in Istanbul, Turkey. Photographer: Kerem Uzel/Bloomberg

 

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Aug. 22 (Bloomberg) -- Dominic Schnider, global head of commodity research at UBS Wealth Management, talks about the outlook for commodities. Schnider speaks from Singapore with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)

Gold climbed to a record above $1,890 an ounce in London and New York as concern about slowing economic growth and debt crises spurred demand for bullion as a protection of wealth. Platinum gained to a three-year high.

German Chancellor Angela Merkel attempted to shut the door on common euro-area bonds as a means to solve the debt crisis, saying she won’t let financial markets dictate policy. The Federal Reserveholds its annual symposium in Jackson Hole, Wyoming, this week, amid speculation it may signal a third round of asset purchases to boost the faltering recovery.

“Gold is still the safe haven, and as long as people fear recession in the U.S. and euro-zone debt problems, gold remains in demand,” Peter Fertig, owner of Quantitative Commodity Research Ltd. in Hainburg,Germany, said by phone. More U.S. asset purchases “would be bullish for gold. Increasing liquidity will lead to higher future inflation, which is a reason to buy gold.”

Immediate-delivery gold gained as much as $42.70, or 2.3 percent, to $1,894.80 an ounce and traded at $1,881.65 by 10:14 a.m. in London. Gold for December delivery was up 1.8 percent at $1,885.90 an ounce on the Comex in New York after touching a record $1,898.60.

Gold is in the 11th year of a bull market, the longest winning streak since at least 1920 in London, as investors seek to diversify their holdings away from equities and some currencies. Global stocks earlier this month slipped to an 11- month low, and bullion reached all-time highs in euros, British pounds and Swiss francs today.

‘Parabolic’ Prices

“Gold is strong in any and all currency terms, and it is now entering that stage when prices go parabolic,” Economist Dennis Gartman said today in his Suffolk, Virginia-based Gartman Letter.

The metal is up 33 percent this year. The MSCI All-Country World Index fell 12 percent this year, the Standard & Poor’s GSCI Index of 24 commodities rose 1.2 percent, while Treasuries returned 7.7 percent, a Bank of America Merrill Lynch index showed.

The Fed bought $600 billion in Treasuries from November through June in a second round of so-called quantitative easing, or QE2. The central bank said Aug. 9 U.S. economic growth was “considerably slower” than anticipated and it’s ready to use a range of policy tools to boost the economy. It pledged to keep interest rates near zero at least until mid-2013.

The yen weakened from near its postwar record against the dollar and the Swiss franc fell amid speculation policy makers in both countries will seek to curb gains in their currencies that are hurting exporters.

Stronger Currencies

“You have a look at some of the other safe-haven assets that investors were looking at, the Swiss franc and Japanese yen,” David Lennox, a resource analyst at Fat Prophets, said from Sydney today. “Authorities there have taken steps to try and curb the rise in those particular currencies. That’s probably pushed more investors into gold.”

The metal’s so-called relative strength index has topped 70 since Aug. 5, a signal to some investors who study technical charts that the metal may be set to decline. Exchange-traded- product holdings fell for the first time in five days on Aug. 19, sliding 2.9 metric tons to 2,211.1 tons, data compiled by Bloomberg show. Assets reached a record 2,216.8 tons on Aug. 8.

Silver for immediate delivery climbed as much as 2.7 percent to $44.055 an ounce, the highest price since May 3, and was last at $43.745. It’s up 41 percent this year.

‘Cautious’ on Silver

“Silver is like a beta version of gold, but I think overall the market is simply looking for alternatives,” Dominic Schnider, director for wealth management research at UBS AG, said in a Bloomberg Television interview. “I would be rather cautious. At best we’re going to see here prices going sideways, so it’s really like speculation and not really like a good fundamental long-term story.”

Platinum was up 1 percent at $1,894.50 an ounce after reaching $1,899.25, the highest price since July 2008. Gold traded above platinum today. An ounce of platinum bought 1.2 ounces of gold on average the past year, Bloomberg data show. Palladium rose 0.2 percent to $753 an ounce.