November 18, 2011, 3:33 PM EST
Article from Blooomberg Businessweek
By Glenys Sim
Nov. 18 (Bloomberg) -- Gold may advance for the first time in three days, paring its worst weekly performance in almost two months, as the spreading European debt crisis increased investor demand for haven assets. Silver fell to the lowest since Oct. 21.
Bullion for immediate delivery gained as much as 0.3 percent to $1,726.28 an ounce and traded little changed at $1,723.60 at 2:44 p.m. Singapore time, reversing a 0.6 percent decline. The metal dropped to $1,710.50 yesterday, the lowest level since Nov. 1. December-delivery futures rose 0.2 percent to $1,724.20 an ounce on the Comex in New York.
“Gold is still an attractive haven investment,” said Tao Jinfeng, chief investment consultant at Haitong Futures Co., China’s largest brokerage by registered capital. “Gold’s recent performance has been hampered by the stronger U.S. dollar,” he said from Shanghai.
Bullion tumbled 4 percent this week, the most since the five days ended Sept. 23, as the dollar advanced 1.7 percent against a six-currency basket including the euro. The euro is poised for its third-straight weekly drop versus the greenback amid concern European policy makers can’t stop the region’s crisis from spreading to larger economies.
Investors drove up the funding costs of France and Spain yesterday as they sold 11.6 billion euros ($15.6 billion) of debt against a backdrop of rising benchmark bond yields. German Chancellor Angela Merkel yesterday rejected French calls to deploy the European Central Bank as a crisis backstop.
‘Choice’ Haven
“Should there be a deterioration in the situation in Europe, such as a cut in Italy’s or France’s credit rating, gold will very quickly re-assert itself as one of the choice havens,” said Tao, ranked fourth in an annual Futures Daily and Securities Times poll of China’s gold analysts.
Global demand for gold rose 6 percent to 1,053.9 metric tons in the third quarter from a year earlier, the World Gold Council said yesterday. The metal is up 21 percent in 2011 for an 11th year of gains as central banks joined investors in stepping up purchases as a store of value.
Investment demand jumped 33 percent to 468.1 tons in the latest quarter, council data show. Demand from central banks, the biggest holders, may total 450 tons this year, the most since at least 1970, according to the council. Tajikistan, Kazakhstan, Bolivia and Thailand added gold to reserves in September, according to the International Monetary Fund’s website. They joined South Korea in raising holdings this year.
Bullish Survey
Nineteen of 29 traders and analysts surveyed by Bloomberg expect gold to climb next week as investors continued to seek the safest assets. Holdings in exchange-traded products backed by the metal are within 0.3 percent of the record 2,330 tons reached in August, data compiled by Bloomberg show.
The ratio of gold to silver climbed to 55.0671 yesterday, the highest level since Oct. 5, as the European crisis damped the industrial demand outlook for the white metal. One ounce of gold bought as much as 55.0598 ounces of silver today.
Cash silver fell as much as 2.4 percent to $30.9675 an ounce, the lowest level since Oct. 21, before trading at $31.5513 an ounce. Spot palladium declined 0.5 percent to $605.75 an ounce after slumping 6.4 percent yesterday, the most since May 2010. Platinum gained 0.6 percent to $1,593 an ounce.
--Editors: Ovais Subhani, Thomas Kutty Abraham
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
Article from Blooomberg Businessweek
