Gold advanced to a record for a third day as mounting inflation around the globe and Europe’s sovereign-debt crisis prompted investors to seek a store of value. Silver climbed to the highest price in 31 years.
Immediate-delivery bullion gained 0.1 percent to $1,488.68 an ounce and traded little changed at $1,485.35 at 10 a.m. in Singapore. Gold for June delivery in New York also climbed to an all-time high of $1,489.70 an ounce.
The “uncertainty in the euro zone and inflation concerns in Asia appear to be the main drivers” of the price, said David Thurtell, Singapore-based head of metals research at Citigroup Inc. “The latter was confirmed by the overnight move by the People’s Bank of China to tighten monetary policy.”
China raised banks’ reserve requirements yesterday to cool inflation and central bank governor Zhou Xiaochuan said that the tightening will continue for “some time.” Consumer prices in China rose at their quickest pace since 2008 in March, exceeding the government’s 2011 target for a third month.
Inflation in the 17-nation euro region quickened to 2.7 percent from 2.4 percent in February, the European Union’s statistics office said last week. U.S. wholesale costs rose 5.8 percent in March compared with a year earlier, and the government said that the cost of living rose for a ninth month.
Gold, which has surged 31 percent in the past year, has gained every year since 2001 on increased investment demand for commodities and on concern that currencies may be debased as central banks stimulate their economies. Unrest in the Middle East, sovereign-debt problems in Europe and Japan’s nuclear crisis have also bolstered sales this year.
Declining Dollar
Moody’s Investors Service cut Ireland’s credit rating by two notches to the lowest investment grade last week, eroding the value of the euro. The dollar has declined 5.1 percent against a basket of currencies this year.
Gold’s 10-year rally has attracted billionaire investors such as George Soros and John Paulson, who seek a store of value as record-low interest rates erode returns on currencies.
“Demand for gold and silver is strong and growing,” Lachlan Shaw, a commodities analyst at Commonwealth Bank of Australia, wrote in a note today. “Negative real deposit rates and lack of investment alternatives could support investment demand for gold for some time yet.” Negative real deposit rates pay savers less on deposits than the rate of inflation.
The U.S. Federal Reserve has kept the benchmark rate in the world’s largest economy at zero percent to 0.25 percent since December 2008 to stimulate growth. Gold held in exchange-traded products rose 19.3 metric tons to 2,069.95 tons on April 15, the highest level since Jan. 24, data compiled by Bloomberg from 10 providers show.
Cash silver gained as much as 0.7 percent to $43.28 an ounce, the highest level since 1980. Palladium and platinum were little changed at $765.50 an ounce and $1,789.75 an ounce, respectively.
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