Gold Rises on Dollar Outlook; Platinum Extends Gains to Record
By Claudia Carpenter
Dec. 18 (Bloomberg) -- Gold gained for the first time in four days in London on speculation a U.S. economic slowdown will halt the dollar's rally, boosting demand for the metal as an alternative asset. Platinum rose to a record on demand in China.
The dollar was little changed today before a U.S. report that may show housing starts declined to a 14-year low in November. Gold fell less than 0.1 percent last week even as the dollar advanced the most in three months against the euro.
``The people who think the dollar rally isn't coming to an end believe in Santa Claus,'' Nicholas Betsky, a partner at Moscow-based DBM Capital Partners, an investment company that owns $55 million of gold and gold shares, said by phone today. ``Gold has not fallen too much with the dollar rally and that's a really positive sign for gold.''
Gold for immediate delivery climbed $6.59, or 0.8 percent, to $799.94 an ounce as of 12:47 p.m. in London. Prices dropped 2.5 percent in the previous three days.
New York gold futures were up $5 at $804.30 an ounce. The UBS Bloomberg Constant Maturity Commodity Index of 26 commodities is up 19 percent this year as gold rose 26 percent.
U.S. housing starts probably fell 4.3 percent in November to an annual rate of 1.176 million, according to the median estimate of 70 economists surveyed by Bloomberg News. The Commerce Department's housing figures are due at 8:30 a.m. in Washington.
$900 Target
Gold may rise to ``at least'' $900 next year, Betsky said.
The 10:30 a.m. gold ``fixing'' price used by some mining companies to sell their production advanced $9.25 to $796.25 an ounce. The midday silver fixing jumped 22.5 cents to $13.97.
Platinum advanced $9.50, or 0.6 percent, to $1,508.50 and earlier rose to a record $1,511, partly on speculation Russia, the world's second-biggest producer, won't approve export licenses for next year.
Demand is also climbing in China as jewelers stock up for the lunar new year holidays in February, said John Reade, an analyst at UBS AG in London. China is the biggest user of platinum for jewelry.
``Chinese demand has picked up since the start of December,'' Reade said.
The cost of borrowing platinum for one year is up to a 12- month high of 8.5 percent today, compared with 7.5 percent yesterday, Reade said. The 9:45 a.m. platinum ``fixing'' rose $24 to a record $1,500 an ounce. The palladium fixing increased $5 to $350.
Platinum Futures
The New York platinum futures contract closest to delivery yesterday became more expensive than the price of contracts for later delivery for the first time since October, a condition known as backwardation. Backwardation trading encourages companies to increase supplies. Production in South Africa, the world's biggest supplier, was disrupted this year by accidents and strikes.
``People are really worried about the supply so they're borrowing and buying the material,'' said Mark Augustynak, a trader at Natixis Commodity Markets Ltd. in London.
Assets in ETFS Physical Platinum, the first exchange-traded fund backed by platinum, climbed to 116.2 million ounces yesterday from 112.9 million ounces last week, figures from the issuer ETF Securities Ltd.
Among other precious metals, silver gained 16.49 cents to $14.0149 an ounce and palladium advanced $4 to $359.50.
