Gold jumped to a record for a second day as the dollar declined, boosting demand for precious metals as alternative assets. Silver advanced to a 30-year high and platinum climbed to the highest price in more than four months.
Gold for immediate delivery climbed as much as 0.3 percent to a record $1,344.35 an ounce and is traded at $1,342.30 at 11:43 a.m. in Seoul. Futures for December delivery gained to an all-time high of $1,345.40 an ounce on the Comex in New York. Spot silver extended gains to as high as $22.9438 an ounce, the highest price since September 1980, before trading little changed at $22.825.
"The dollar is falling, and that is increasing the appeal of gold and other precious metals," said Park Jong Beom, a trader at Tong Yang Futures Trading Co. in Seoul. "In addition, there's talk of more monetary easing out there and that means we will probably have more liquidity in the markets, increasing concerns about inflation. Demand for gold as a hedging tool against inflation is strong, too."
The Dollar Index, which gauges the greenback's value against six major monies, was little changed today after yesterday falling to the lowest level since January. Federal Reserve Bank Chairman Ben S. Bernanke Oct. 4 a first round of asset purchases in the U.S. improved the economy and that further buying is likely. The Bank of Japan yesterday pledged to keep its benchmark interest rate at "virtually zero" percent.
‘Quantitative Easing'
Bullion has outperformed global equities and Treasuries this year, prompting record investment in gold-backed exchange- traded products. The price has gained 22 percent this year, heading for the 10th straight annual gain and the longest rally since at least 1920, as central banks and governments maintained low borrowing costs and spent trillions of dollars to stimulate economies.
"The potential for additional quantitative easing and the likelihood of continued fiat currency weakness bolsters our desire to own gold, despite prices already trading at record highs," analysts led by Hussein Allidina and Peter Richardson at Morgan Stanley wrote in a report dated yesterday. Gold prices are expected to average $1,315 an ounce in 2011, 14 percent higher than Morgan Stanley's previous forecast, they wrote.
The Fed has left its benchmark interest-rate target at a record low and pledged to take more steps to spur growth. Japan's central bank set up a 5 trillion yen fund to buy government bonds and other assets. Bernanke and other officials have signaled over the past two weeks that the central bank may purchase more Treasuries at its next policy meeting on Nov. 2 to Nov. 3 to boost economic growth and reduce unemployment.
Exchange-Traded Holdings
Gold assets in exchange-traded products rose 0.6 metric ton to 2,094.9 tons as of Oct. 5, according to data compiled by Bloomberg from 10 providers. Holdings are up 17 percent this year and reached an all-time high of 2,097.01 tons on Sept. 30.
Holdings in the iShares Silver Trust, the biggest exchange- traded fund backed by the metal, climbed 94.32 metric tons to a record 9,877.20 tons as of Oct. 5, according to the company's website.
Silver has risen 35 percent this year, outperforming gold. The ratio of gold to silver dropped to as low as 58.5171, the lowest level since September 2009.
Immediate-delivery platinum advanced as much as 0.9 percent to $1,707.50 an ounce, the highest level since May 14, before trading at $1,699 an ounce. Palladium declined 0.2 percent to $579 an ounce.
Source: http://www.bloomberg.com/news/2010-10-06/spot-gold-futures-climb-to-records-silver-extends-rally-to-30-year-high.html
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