Gold, which reached a six-week high in New York today, may gain as signs of a slowing economic recovery and a weaker dollar increase demand for the metal as a protection of wealth.
German investor confidence dropped more than forecast to a 16-month low in August, the ZEW Center for European Economic Research said today. The dollar fell against the euro for a second day. Gold usually moves inversely to the greenback.
“Gold continues to benefit from improving investment demand,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said in a report. “Fears over the global economic recovery are helping” to support the metal, he said.
Gold futures for December delivery added as much as $4.90, or 0.4 percent, to $1,231.10 an ounce, the highest price since July 1. Gold was at $1,228.20 at 8:02 a.m. on the Comex in New York. The metal for immediate delivery in London was 0.1 percent higher at $1,226.50.
Bullion rose to $1,226.25 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,223.50 at yesterday's afternoon fixing. The dollar fell as much as 0.7 percent against the euro today.
The Mannheim-based ZEW said its index of investor and analyst expectations, which aims to predict developments six months ahead, fell to 14 from 21.2 in July, its fourth straight decline. Economists had forecast a drop to 20. Still, ZEW's gauge of current conditions jumped to 44.3, the highest since January 2008.
Shield Against Turmoil
Gold futures have climbed 12 percent this year, reaching a record $1,266.50 an ounce in June, as investors sought a shield against financial turmoil and currency debasement. The metal is on course for its 10th annual advance, the longest winning streak since at least 1920. International economic uncertainty may stoke turbulence in global financial markets, Bank of Korea Governor Kim Choong Soo said today.
“People are getting worried about the economy again, more worried than a month ago,” said Ghee Peh, Hong Kong-based head of Asian mining research with
UBS Securities Asia Ltd. “Gold will extend its rally.”
Assets in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, were unchanged for a second day at 1,286.7 metric tons yesterday, the company's website showed. Holdings reached an all-time high of 1,320.44 tons in June.
Eric Mindich's $13 billion Eton Park Capital Management LP bought 6.58 million SPDR shares in the second quarter, according to a regulatory filing yesterday. The investment was valued at $800.3 million as of June 30, making it the
hedge fund's biggest holding.
Billionaire investor George Soros' Soros Fund Management LLC cut its SPDR holdings by 341,250 shares in the quarter to 5.24 million shares, a filing showed.
Silver for December delivery in New York rose 0.8 percent to $18.63 an ounce. Platinum for October delivery was 0.6 percent higher at $1,546.90 an ounce. Palladium for September delivery rose 1.4 percent to $492.50 an ounce.
