By Kim Kyoungwha
June 28 (Bloomberg) -- Gold may advance for a third day, approaching a record, as investment demand continues to rise on concern the sovereign-debt crisis in Europe will be prolonged.
Gold for immediate delivery climbed 0.2 percent to $1,258.55 at 8:58 a.m. in Singapore. The metal touched an all- time high of $1,265.30 an ounce on June 21. August-delivery futures were up 0.2 percent at $1,259.10 an ounce.
“Gold is positioned to extend its rise as people still remain unnerved by the developments in Europe,” said Yu Kyung Kyu, Seoul-based trader with Eugene Investment & Futures Co. “That keeps fueling flight-to-quality sentiment,” he said.
Gold has gained 15 percent in 2010, after posting nine annual gains, as investors sought an alternative to currencies. Gold also reached records this month in euros, sterling, Swiss francs and yuan. The euro has lost 14 percent this year. “Low borrowing costs are very supportive of gold,” Yu said.
Central banks and governments have kept low borrowing costs and spent trillions of dollars to stimulate economies after the worst financial crisis since the Great Depression. The Federal Reserve on June 23 retained a pledge to keep the benchmark interest rate at a record low for an extended period and signaled that European indebtedness may harm American growth.
China Gold
Funds have flowed to gold from property after the Chinese government introduced steps to curb gains in the real-estate market, Shen Xiangrong, chairman of the Shanghai Gold Exchange, said at a financial forum in Shanghai on June 25.
Gold trading accounts have increased significantly following the property clampdown, he said. Demand for gold as wealth protection and a hedge against inflation will support prices, he said. Gold futures in Shanghai rose to a record 277.01 yuan a gram last week and last traded at 275.72 yuan.
Hedge-fund managers and other large speculators increased their net-long position in New York gold futures in the week ended June 22, according to U.S. Commodity Futures Trading Commission data.
Speculative long positions, or bets prices will rise, outnumbered short positions by 238,634 contracts on the Comex division of the New York Mercantile Exchange, the Washington- based commission said in its Commitments of Traders report. Net- long positions rose by 8,383 contracts, or 4 percent, from a week earlier.
Silver climbed 0.5 percent to $19.175 an ounce, platinum jumped 1.3 percent to $1,592.10 an ounce and palladium was up 0.4 percent at $480.38.
--Editors: Jarrett Banks, Richard Dobson
To contact the reporter on this story: Kyoungwha Kim in Singapore at Kkim19@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
From Bloomberg Businessweek published on June 27, 2010, 10:24 PM EDT
