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Gold Climbs in London as U.S, Europe Economic Woes Spur Investment Demand
Sep 5,2011 17:09CST
industry news
Source:SMM
Gold gained for a third day in London as concern about slowing economic growth and Europe’s debt woes spurred demand for a protection of wealth.

Sept. 5 (Bloomberg) -- Gold gained for a third day in London as concern about slowing economic growth and Europe’s debt woes spurred demand for a protection of wealth. Bullion futures climbed above $1,900 an ounce.

European equities dropped after an election loss for German Chancellor Angela Merkel’s party spurred concern that support for bailing out Europe’s indebted nations may fade. Bullion jumped 3.1 percent on Sept. 2, the most in almost four weeks, as data showed the U.S. jobs market stalled in August, fueling concern the country’s economy may be headed for a recession.

“With the implications of Friday’s U.S. payrolls report and intense focus on European sovereign issues this week, gold has two strong reasons to rally,” Edel Tully, a London-based analyst at UBS AG, wrote in a report. “Additional evidence of U.S. economic weakness raises the likelihood that the Federal Reserve will announce further easing this month. As European woes reclaim center-stage and in turn investor nervousness extends, these factors will support gold in the coming weeks.”

Immediate-delivery gold rose $10.75, or 0.6 percent, to $1,893.63 an ounce by 9:02 a.m. in London. The metal reached a record $1,913.50 on Aug. 23. Gold for December delivery was up 1 percent at $1,895.80 on the Comex in New York after touching $1,900.30. Floor trading will be closed today for the Labor Day holiday.

Bullion is in the 11th year of a bull market, the longest winning streak since at least 1920 in London, as investors seek to diversify away from equities and some currencies. The metal is up 33 percent this year, outperforming global stocks, commodities and Treasuries. The metal climbed to a record priced in euros and British pounds today.

Merkel Loss
Merkel’s party yesterday suffered its fifth election loss this year after the chancellor failed to sway voters in her home state with a campaign based on her handling of the euro area’s debt crisis.

European sovereign-debt risk rose to a record on Sept. 2 as the International Monetary Fund was said to oppose European plans to force Greece to put up collateral in its second rescue. World Bank President Robert Zoellick said in Beijing on Sept. 3 that the global economy is entering a “new danger zone” amid Europe’s debt difficulties.

“U.S. growth concerns and euro-zone debt concerns continue to overshadow markets,” James Moore, an analyst at TheBullionDesk.com in London, wrote in a report. Gold will be supported by “investors seeking to diversify from the volatile flows in equities.”

Gold exchange-traded-product holdings fell for a third day on Sept. 2, declining 1.7 metric tons to 2,142.4 tons, data compiled by Bloomberg show. Assets reached a record 2,216.8 tons on Aug. 8.

Silver for immediate delivery was little changed at $43.2325 an ounce. Platinum was down 0.2 percent at $1,879.80 an ounce. Palladium gained 0.1 percent to $775.75 an ounce.

 

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