Gold Rises to 27-Year High as Dollar Drop Spurs Investor Demand
By Claudia Carpenter
Sept. 20 (Bloomberg) -- Gold rose to a 27-year high in New York and London as the dollar sank to a record low against the euro, spurring demand for alternative investments.
Bullion has advanced 14 percent this year, heading for its seventh consecutive annual gain, as investors seek a hedge against inflation as oil rose to a record. Gold assets in funds managed by ETF Securities Ltd., a London-based money manager, more than tripled in the past seven weeks, a record rate.
``Gold is a hedge against everything in life,'' said Pavel Skitovich, chief executive officer of Moscow-based OAO Polyus Gold, Russia's biggest gold producer, in an interview in London.
Gold for immediate delivery gained $7.05, or 1 percent, to $728.45 an ounce as of 11:53 a.m. in London. Prices earlier climbed to $730.51, the highest since Jan. 22, 1980. The record was $850 an ounce on Jan. 21, 1980.
Gold futures for December delivery gained $6.80, or 0.9 percent, to $736.30 an ounce in electronic trading on the Comex division of the New York Mercantile Exchange. Prices earlier rose to $738.30, the highest since Feb. 11, 1980. That exceeded a 27- year high of $735.50 set Sept. 18.
Credit Suisse Group, Switzerland's second-biggest bank, raised its 12-month forecast for gold to a range of $730 to $770 an ounce, from a previous forecast of $670 to $720, according a report yesterday by Tobias Merath, head of commodity research.
Gains accelerated to over $700 an ounce this month on signs investors were seeking a haven from losses in U.S. subprime mortgages.
Gold may rise to $800 by the end of this year, said Michael Widmer, director and head of metals research at Calyon in London. Frederic Panizzutti, a senior vice president at MKS Finance, one of Switzerland's four bullion refiners, said the metal may reach $750 this year.
Cristal Champagne
Skitovich said he has bet a case of Cristal champagne that gold won't go over $800 this year. A six-bottle case of 2000 Cristal Prestige Cuvee costs 870 pounds ($1,748) to buy from Fortnum & Mason, a department store in London.
Gold may decline on speculation this month's 11 percent advance, heading for the biggest monthly gain since April last year, is overdone. The 14-day relative strength index for spot gold has exceeded 70 for most of this month, a chart signal that prices may decline.
At these prices, ``investors are likely to be less aggressive in the fourth quarter than they have been in the third quarter,'' Michael Jansen, an analyst at JPMorgan Securities Ltd. in London, wrote in an e-mailed report today.
Assets in funds that hold gold such as Lyxor Gold Bullion Securities on the London Stock Exchange have climbed about 120 metric tons since July, exceeding the record quarterly increase of 120 tons in the first quarter of 2006, he said.
Northern Rock
``I won't rule out a correction,'' said Suki Cooper, an analyst at Barclays Capital in London.
Some banking customers of Northern Rock Plc, bailed out by the Bank of England, have withdrawn some money and put it into gold, said Mark O'Byrne, managing director of Dublin-based brokerage Gold & Silver Investments Ltd.
``Buyers are diversifiers and are buying more for safe haven reasons,'' he said in an e-mailed message today.
Barrick Gold Corp., the world's biggest gold producer, is forecasting a 10 percent to 15 percent decline in global gold mine production in the next five to seven years. Mine supply last year fell to a 10-year low.
World investment demand will be 306 metric tons in the second half of this year, compared with purchases of 10 tons in the first six months of 2007, London-based research company GFMS Ltd. forecast last week. The dollar fell to a record $1.4065 against the euro today.
``When the euro went to $1.40, we were off to the races,'' said Jack Allen, head gold trader at Natixis Commodity Markets in London. ``We've already seen some new investment demand.''
Silver rose 19 cents, or 1.5 percent, to $13.125 an ounce and earlier gained to $13.19, the highest since Aug. 8.
To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net
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سرانجام چنانکه انتظار می رفت، بار دیگر یورو رکورد صعودی خود در برابر دلار آمریکا را شکست و اکنون در بالاترین نرخهای تاریخی خود قرار گرفته است. مهمترین دلیل اقبال معامله گران به خرید یورو، نگرانی از وضعیت اقتصادی ایالات متحده و انتظار برای اعلام کاهش نرخ بهره بانکی ()