Gold climbed to trade within 1 percent of a record and silver advanced to a 30-year high as a slump in the US dollar increased demand for alternative assets.
Immediate-delivery bullion rose as much as 0.7 percent to US$1,355.65 an ounce, approaching the record of US$1,364.77 set on Thursday. Silver gained as much as 1.6 percent to reach US$23.6325 an ounce, the highest price since 1980. The US dollar slumped against the euro after dropping last week to the lowest level since January.
“We are seeing a continuation of weakness in the US dollar and that is probably the main driver at the moment for gold,” Darren Heathcote, head of trading at Investec Bank (Australia) Ltd in Sydney, said yesterday by telephone.
The US dollar fell after a larger-than-expected cut in US jobs last week increased speculation that the Federal Reserve will widen government-debt purchases to bolster the economy. Bullion typically moves in the opposite direction to the US currency.
“The speculation that they are going to do it is growing by the day,” Heathcote said, referring to a Fed decision for a further round of so-called quantitative easing. Spot gold was at US$1,352.25 an ounce at 5:40pm in Melbourne, 0.5 percent higher.
Gold for December delivery on the Comex in New York rallied as much as 0.8 percent to US$1,356.30 an ounce before trading at US$1,354. Futures, which have advanced about 23 percent this year, reached an all-time high of US$1,366 an ounce on Thursday.
Twelve of 18 traders, investors and analysts surveyed by Bloomberg News said that the metal will rally this week. Five forecast lower prices and one was neutral.
“As long as central banks are willing to be led by the Fed down a never-ending pathway of debasement, gold will continue to rise,” said Peter Schiff, the president of brokerage Euro Pacific Capital in Darien, Connecticut. Schiff forecast gold will advance to US$2,000 an ounce next year.
The US dollar traded at US$1.3973 per euro at 6:45am. in London from US$1.3939 in New York on Friday. The greenback declined last week to its lowest since January against a basket of six major currencies.
The IMF’s steering committee said on Saturday the group should “deepen its work” on capital flows, exchange rates and issues related to the reserve accumulation amid global tensions over currency and interest rate levels.
“The concern is attempts by countries to depreciate their -currency for export advantage could result in protectionist retaliation,” Australia & New Zealand Banking Group Ltd Senior Commodity Strategist Mark Pervan wrote in a report dated yesterday.
China is accused of keeping the yuan undervalued to boost exports, while Japan and Brazil are among countries that have acted to try to restrain their exchange rates. Low interest rates in the US and other industrial nationals are blamed for propelling capital flows into emerging markets.
Demand for gold as a haven from weakening currencies has helped boost investment in exchange-traded products. Global holdings gained about 1.1 tonnes to 2,084.76 tonnes on Friday, according to Bloomberg data from 10 providers, after reaching a record 2,097.01 tonnes on Sept. 30
Macquarie Bank Ltd forecast that gold and silver will trade 15 percent higher than previously expected next year. Bullion will average US$1,265 an ounce and silver US$19.50 an ounce, the bank said in a report e-mailed last week.
Platinum was little changed at US$1,706.75 an ounce, while palladium advanced as much as 0.7 percent to US$591.25 an ounce after reaching a nine-year high of US$604 last week.
US employers cut payrolls by 95,000 workers in September after a revised 57,000 decrease in August, US Labor Department figures in Washington showed on Thursday. The median forecast of 87 economists surveyed by Bloomberg News called for a 5,000 drop. The unemployment rate unexpectedly held at 9.6 percent.
The US Commerce Department will release retail sales figures for September on Friday, with a gain of 0.4 percent forecast, based on the median estimate of 57 economists surveyed by Bloomberg News.
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