Aug. 24 (Bloomberg) -- Gold rebounded after dropping from a record as concern about a global economic slowdown exacerbated by sovereign-debt crises increased demand for a store of value.
Immediate-delivery gold advanced as much as 1.3 percent to $1,852.70 an ounce before trading at $1,850.35 at 9:56 a.m. in Singapore. The metal touched an all-time high of $1,913.50 yesterday before closing 3.7 percent lower on optimism the U.S. Federal Reserve will act to stimulate the faltering economy.
Japan’s sovereign-credit rating was lowered by Moody’s Investors Service today, following the first cut of the U.S.’s sovereign grade this month by Standard & Poor’s. The move comes amid concern the euro area’s debt crisis may worsen after German Chancellor Angela Merkel rejected a call by her nation’s Labor Minister Ursula von der Leyen for countries to put up gold as security for bailouts, reflecting euro-area divisions.
“Three pillars are set to strengthen and drive prices further into uncharted territory,” said Barclays Capital analysts including Suki Cooper today. These are a “structural shift in macroeconomic instability,” accelerating investment demand and the return of central bank buying, they said.
Central bankers from around the world gather on Aug. 26 in Jackson Hole, Wyoming, for an annual meeting that last year saw Fed Chairman Ben S. Bernanke hint of a second round of asset purchases. That’s created optimism the Fed may move to bolster the economy at this week’s meeting.
“The macro environment is evolving increasingly favorably for gold,” wrote Cooper. “A return of market confidence in the state of the global economy, coupled with high and rising real interest rates and controlled inflation, will be required to quell its gains. Prices could be subject to temporary corrections as profit-taking emerges.”
Gold for December delivery in New York fell as much as 1.6 percent to $1,831.50 an ounce before trading at $1,853.50. Cash silver gained 1.2 percent to $42.4050 an ounce and platinum increased 0.9 percent to $1,879.45 an ounce. Spot palladium fell 0.3 percent to $760 an ounce.