Investors seek safety of gold
Gold advanced on concerns that US lawmakers may fail to reach an agreement on the budget by year's end, risking a recession and boosting the need for a protection of wealth. Platinum rose for a fourth day.
Gold for immediate delivery gained as much as 0.3 per cent to $US1729.25 an ounce and traded at $US1727.80 at 10.06am in Singapore.
Prices fell 0.2 per cent yesterday, the third straight drop and the worst run since October 10.
Bullion for December delivery climbed as much as 0.3 per cent to $US1729.20 an ounce on the Comex in New York.
Gold will probably rally to a record above $US2000 an ounce next year as central banks ramp up stimulus to sustain the recovery, according to Raymond Key, London-based global head of metals trading at Deutsche Bank AG.
‘‘We’ll take out $US2000, we’ll go higher,’’ Mr Key said in Hong Kong, where he attended the London Bullion Market Association’s annual conference.
‘‘That’s on the view that they’ll continue to print money.’’
US President Barack Obama meets Democratic and Republican leaders in Congress this week. Lawmakers need to reach a deal in order to avert the so-called fiscal cliff of $US607 billion in spending cuts and tax increases starting in January, an outcome that many economists predict would cause a recession.
Most Americans expect the US to go over the cliff and would blame Republicans if it happens, according to a survey.
‘‘The best insurance policy you can have would be to accumulate gold,’’ said Gavin Wendt, senior resource analyst at Mine Life in Sydney. ‘‘That will be more acknowledged as the deadline approaches.’’
Holdings in exchange-traded products backed by bullion advanced 0.1 per cent to 2595.87 metric tonnes on Tuesday, according to data compiled by Bloomberg.
Assets reached a record 2596.11 tonnes on November 8, the data show.
Spot platinum gained 0.5 per cent to $US1590.50 an ounce. Prices are up for a fourth day, the best run since October 1.
Labor disputes in South Africa will help cut platinum output to the least since 2000 and leave the market short by 400,000 ounces, the most since 2002 and compared with last year’s surplus of 430,000 ounces, London-based Johnson Matthey said.
Unrest over pay erupted into fighting and deaths at Lonmin's Marikana mine and spread to other operations this year in the country, the largest producer.
Silver for immediate delivery rose as much as 0.5 per cent to $US32.64 an ounce and traded at $US32.5413. Palladium was little changed at $US635 an ounce.