Gold rose to a record above $1,860 an ounce, poised for the longest run of weekly gains since April 2007, as escalating concern the global economy is slowing drove equities lower and spurred demand for a haven.
The metal is set for a seventh weekly advance as worse- than-expected U.S. economic data and Europe’s debt crisis boost speculation growth will falter. Asian stocks extended a global rout today after a Philadelphia-area manufacturing index sank to the lowest level since 2009, U.S. jobless claims rose and existing home sales fell. Morgan Stanley and Deutsche Bank AG this week cut forecasts for China’s growth.
“The drivers of the gold price at this point in time are all future expectations, such as more global liquidity and worsening of the status quo in global GDP,” said Bayram Dincer, an analyst at LGT Capital Management in Pfaeffikon, Switzerland. “Either the gold market has adopted a very negative, and in our opinion not justifiable, negative, Armageddon-like view, or it is building an irrational bubble.”
Immediate-delivery bullion advanced $44.15, or 2.4 percent, to $1,867.95 an ounce by 11:14 a.m. in London after reaching a record $1,868.63. Prices are up 6.7 percent this week. Gold for December delivery gained 2.7 percent to $1,871.20 on the Comex in New York after touching an all-time high of $1,872.20.
Gold Holdings
Holdings in gold exchange products touched 2,216.8 metric tons on Aug. 8, the most ever, data compiled by Bloomberg show. Assets climbed 0.7 percent yesterday to 2,215.002 tons.
“Gold is the currency of the world at the moment, with the world convinced that the monetary and fiscal authorities are likely to do nothing right and everything wrong when it comes to resolving the world’s current fiscal problems,” Dennis Gartman, the economist who correctly forecast 2008’s commodities slump, said in his daily Gartman Letter today.
Gold also reached record highs priced in Swiss francs, South African rand, New Zealand and Canadian dollars, euros and British pounds. June-delivery gold on the Tokyo Commodity Exchange rallied to its highest ever.
The metal, up 31 percent this year, is in the 11th year of a bull market, the longest winning streak since at least 1920. Investors want to protect their wealth from declining equities, depreciating currencies and accelerating consumer prices. Gold may climb next week amid concern about debt crises and slowing growth, a Bloomberg News survey showed.
Debt Crisis
Sweden’s financial regulator said lenders must do more to prepare for a worsening debt crisis in the region as the Wall Street Journal reported American regulators are intensifying scrutiny of the U.S. arms of Europe’s largest banks.
“Medium term, the disorder of the global monetary system and long-term inflation threat will amplify gold’s nature as a currency and an inflation hedge,” said Cai Hongyu, an analyst at China International Capital Corp., the country’s biggest investment bank.
Silver for immediate delivery advanced 1.9 percent to $41.36 an ounce after touching $41.4338, the highest price since Aug. 4. Platinum rose 1.7 percent to $1,876 an ounce, the ninth advance in a row. Palladium fell 0.5 percent to $753 an ounce.
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