Gold climbed to a record in London and New York for a fifth day, trading above US$1,500 an ounce, as a weaker US dollar and debt concerns boosted demand for the metal as an alternative investment. Silver rose to a 31-year high.
The US dollar slid to the lowest level since August 2008 against a basket of six major currencies. Greek two- and 10-year government bond yields reached euro-era records amid speculation the nation won’t be able to avoid restructuring its debts.
Fighting in Libya and Japan’s nuclear crisis helped gold, which typically moves inversely to the greenback, to gain 6.1 percent this year.
Photo: Reuters
“The key element determining gold’s near-term direction right now is the US dollar,” Edel Tully, an analyst at UBS AG in London, said yesterday in a report to clients.
“Sovereign debt concerns in US and Europe along with inflation fears provide a good backdrop for gold,” Tully said.
Bullion for immediate delivery gained as much as US$6.32, or 0.4 percent, to US$1,508.88 an ounce and was at US$1,507.59 by 8:59am in London. Gold for June delivery was 0.6 percent higher at US$1,508.10 an ounce on the Comex in New York after reaching a record US$1,509.50.
The US Dollar Index fell as much as 0.8 percent before a report forecast to show US house prices fell for a fourth month, underscoring prospects the Federal Reserve will maintain monetary stimulus.
Central banks in Europe and Asia have raised interest rates to help combat accelerating consumer prices.
The US Department of Treasury projects the government could reach its debt ceiling limit of US$14.3 trillion as soon as the middle of next month and run out of options for avoiding default by early July.
The uprising in Libya, which began on Feb. 17, has settled into a military stalemate near the central oil-port city of Brega. Italy, France and the UK said they are sending military advisers and trainers to help Libya’s disorganized and poorly equipped rebels, as French President Nicolas Sarkozy called for intensifying airstrikes against forces loyal to Libyan leader Muammar Qaddafi.
Seventeen of 20 traders, investors and analysts surveyed by Bloomberg, or 85 percent, said bullion would rise next week. Two predicted lower prices and one was neutral.
“Trading is expected to be thin today and next week as market participants will be out” because of holidays, Tully said.
“The lack of liquidity means that gold may not be as orderly as it has been this week and we could see large price swings,” Tully said.
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