Gold futures rose, ending the longest slump this year, as China’s pledge to help resolve Europe’s debt crisis boosted demand for commodities.
The Standard & Poor’s GSCI Spot Index of 24 raw materials rose to a six-month high. Zhou Xiaochuan, China’s central bank governor, indicated the nation will invest in Europe’s bailout funds. Paulson & Co., the $23 billion hedge fund run by John Paulson, said that “now is the time” to buy gold as an inflation hedge. Paulson is the biggest holder in the SPDR Gold Trust, the largest exchange-traded fund backed by the metal.
The signal from China “is definitely helping all commodities, including gold,” Miguel Perez-Santalla, a vice president at Oklahoma City-based Apmex Inc., an online metal dealer, said in a telephone interview from New York. “Also, some investors are buying because they are not sure whether Greece will finally be able to get out of the mess.”
Gold futures for April delivery rose 0.6 percent to settle at $1,728.10 an ounce at 1:53 p.m. on the Comex in New York, the biggest gain for a most-active contract since Feb. 7.
The metal dropped 1.3 percent in the previous three sessions, the longest slump since late December. Gold has gained 10 percent this year.
Evangelos Venizelos, Greece’s finance minster, said today that Europe’s wealthier countries are “playing with fire” by indicating that the country may be expelled from the 17-nation euro bloc.
Paulson said Greece may default by the end of March, triggering the breakup of the euro. His comments were in a year- end letter sent to clients this month. A copy was obtained by Bloomberg.
In the fourth quarter, Paulson cuts his stake in the SPDR gold ETF by 15 percent. Hedge funds including Vinik Asset Management LP, Tudor Investment Corp. and SAC Capital Advisors LP also sold shares. Soros Fund Management LLC and Lone Pine Capital LLC increased their holdings.
Silver futures for March delivery advanced 0.2 percent to $33.408 an ounce. The price has gained 20 percent this year.
On the New York Mercantile Exchange, palladium futures for March delivery fell 0.5 percent to $683.65 an ounce. The price fell for the fifth straight session, the longest slump since early October. The metal has gained 4.2 percent this year.
Platinum futures for April delivery rose 0.6 percent to $1,638.20 an ounce, ending a four-session slide.