Gold Gains, Nearing Record, as Investors Seek Wealth Protection

Image via Wikipedia

By Kim Kyoungwha

May 14 (Bloomberg) -- Gold climbed in Asia as investors bought the precious metal on speculation that Europe’s debt- cutting measures will slow economic growth.


Bullion for immediate delivery rose 0.5 percent to $1,238.32 an ounce at 9:13 a.m. in Singapore. The metal, which touched an all-time high of $1,248.82 an ounce on May 12, has advanced 2.5 percent this week, a fourth consecutive weekly gain. June-delivery futures in New York jumped 0.8 percent to $1,238.90 an ounce.

“Gold will continue its rally given strong demand from investors unnerved by the turbulence in Europe’s debt-ridden nations,” said Chris Yoo, head of the derivatives team with Samsung Futures Co. in Seoul. “Gold is moving into an uncharted territory in terms of prices.”

European governments are planning austerity measures after policy makers and the International Monetary Fund pledged almost $1 trillion to rescue indebted nations. The euro, which generally has moved in tandem with gold as an alternative to the dollar, has slumped 13 percent this year.

Gold denominated in euros, British pounds and Swiss francs has climbed to records this week. Holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, have advanced 6.7 percent this year to a record 1,209.5 tons.

The “euro’s demise has not finished yet; there’s going to be a lot of turbulence in this particular currency,” Bob Takai, Tokyo-based general manager of financial services at Sumitomo Corp., said in an interview this week. “Gold is nobody’s liability. In times of uncertainties, people’s appetite for solid assets such as gold will rise.”

He forecast gold will climb to $1,350 an ounce this year.

Fifteen of 19 traders, investors and analysts surveyed by Bloomberg, or 79 percent, said bullion would rise next week. Two forecast lower prices and two were neutral. Bullion may reach $1,500 this year, according to the median estimate of 23 respondents in a May 12 survey.

Among other precious metals, platinum for immediate delivery fell 0.4 percent to $1,727 an ounce, silver rose 0.3 percent to $19.485 an ounce and palladium was little changed at $539.25 an ounce.

--Editors: Matthew Oakley, Gavin Evans.

To contact the reporters 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