Gold Gains on Commodity Rally, Euro Concerns
Feb. 11 (Bloomberg) -- Gold climbed to a one-week high in New York as signs of an economic recovery boosted demand for commodities and as some investors sought a haven amid concern over Greece’s finances.
The metal climbed alongside the dollar after an agreement brokered by the European Union to help Greece weather its debt crisis offered few details. Industrial metals including copper gained as reports in Australia and China signaled a stronger economic recovery.
“Gold is moving along with all of the commodities,” said Adam Klopfenstein, a senior market strategist in Chicago at Lind-Waldock, a unit of MF Global Holding Ltd. “There’s some economic optimism that’s bringing in buying. People want to embrace gold with the overall risk tolerance that is coming back into the market today.”
Gold futures for April delivery climbed as much as $18.50, or 1.7 percent, to $1,094.80 an ounce on the New York Mercantile Exchange’s Comex unit and traded at $1,093.60 at 11:50 a.m. local time. Gold for immediate delivery in London was 1.9 percent higher at $1,092.95.
The metal slipped to $1,076.25 an ounce in the afternoon “fixing” in London, used by some mining companies to sell production, from $1,079.50 at the morning fixing. The dollar has gained as concern about Greece’s finances weighed on the euro.
“We expect dips to continue to draw investment interest” on sovereign debt concerns, while “the positive economic outlook in the Asian region has given gold a lift,” James Moore, an analyst at TheBullionDesk.com in London, said in a report.
Greece, Spain, Portugal
The U.S. Dollar Index, a six-currency gauge of the greenback’s value, added as much as 0.6 percent today. Bullion typically moves inversely to the U.S. currency.
The dollar has climbed 5.1 percent against the euro this year on concern that fiscal gaps in Greece, Spain and Portugal may widen. Euro-region leaders including German Chancellor Angela Merkel ordered Greece to get the bloc’s highest budget deficit under control and said they are prepared to take “determined” action to staunch the worst crisis in the currency’s 11-year history.
Fewer Americans than anticipated filed claims for unemployment insurance last week, the Labor Department said today. Australia’s jobless rate unexpectedly fell last month amid the country’s biggest hiring boom in five years, while China’s statistics bureau said lending surged to 1.39 trillion yuan ($204 billion) in January and property prices climbed the most in 21 months.
No Gold Collapse
“I won’t rule out that gold will go down to $950 or $1,000, but I don’t expect more downside,” investor Marc Faber, who publishes the “Gloom, Boom and Doom Report,” said in an interview with Bloomberg Television in Hong Kong. “I don’t see any scenario where gold will collapse.”
Gold advanced 24 percent in 2009, a ninth consecutive gain, as governments cut interest rates and spent trillions of dollars to prop up economies and central banks in nations including India and China boosted bullion reserves. Gold futures are little changed this year.
The Federal Reserve may raise its discount rate “before long” as part of the “normalization” of lending, Chairman Ben S. Bernanke said yesterday in testimony for Congress. A change in the rate, currently at 0.5 percent, won’t signal an altered outlook for monetary policy, he said, repeating that low rates are warranted “for an extended period.”
Silver for March delivery in New York advanced 2 percent to $15.605 an ounce. Platinum for April delivery added 0.6 percent to $1,521.80 an ounce. Palladium for March delivery gained 1.8 percent to $420.90 an ounce.
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