Gold, Little Changed in London, May Advance on Haven Buying
By Nicholas Larkin
Feb. 10 (Bloomberg) -- Gold, little changed in London, may end two days of losses on concern the global economy will deteriorate, lifting demand for the metal as a store of value. Platinum climbed to a four-month high.
President Barack Obama yesterday said the U.S. economy faces a “full-blown crisis” and the nation needs government action now to put people back to work. Senators will vote today on Obama’s economic stimulus bill of more than $800 billion.
“We expect bullion to rise as investors seek haven assets on speculation President Barack Obama’s $827 billion stimulus package won’t lead to a rapid recovery by the U.S. economy,” London-based broker Marex Financial Ltd. said in a note.
Bullion for immediate delivery added 27 cents to $894.82 an ounce by 11 a.m. in London. April futures rose $3.20, or 0.4 percent, to $896 in electronic trading on the Comex division of the New York Mercantile Exchange.
The metal increased to $896 in the morning “fixing” in London, used by some mining companies to sell production, from $895 at yesterday’s afternoon fixing. Spot prices are up 1.5 percent this year.
Treasury Secretary Timothy Geithner is scheduled to unveil a financial-rescue plan today that may determine the effectiveness of the stimulus package. Governments are trying to ease a financial crisis that has spurred more than $1 trillion in credit-related losses as the International Monetary Fund predicts global growth will almost grind to a halt this year.
Impact on Inflation
“The size of the fiscal injection is still being discussed, but in any case we think that it will create a substantial inflationary impact in the long term,” Andrey Kryuchenkov, an analyst with VTB Capital in London, wrote in a note.
Goldman Sachs Group Inc. and UBS AG raised their forecasts for gold last week, citing the increased risk in financial markets and mounting concern that government spending on bank bailouts and economic stimulus will spur inflation.
Holdings in the SPDR Gold Trust, the largest exchange-traded fund backed by bullion, extended gains to a record 881.67 metric tons yesterday. Assets in funds managed by ETF Securities Ltd. and Zuercher Kantonalbank are also at an all-time high.
Among other metals for immediate delivery in London, silver gained 0.9 percent to $12.95 an ounce. Platinum rose $36.50, or 3.7 percent, to $1,027 an ounce, and palladium was 1.9 percent higher at $211.50 an ounce.
To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net
Last Updated: February 10, 2009 06:40 EST
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