Coeur d'Alene Mines Corp. (CDE)

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Gold Rises on Investment Demand; Silver Jumps Most Since May

By Claudia Carpenter and Halia Pavliva

Aug. 28 (Bloomberg) -- Gold futures rose to a three-week high on signs of increasing investor demand. Silver had the biggest gain in almost four months.

Gold assets in exchange-traded funds monitored by UBS AG are “98 percent of the all-time highs,” the bank said today in a report. Holdings in ETF Securities Ltd.’s exchange-traded commodities rose to a record yesterday.

“Our coin and investment-bar sales in Europe this week for the first time in several months were reasonable, or even quite good,” said John Reade, the head of metals strategy at UBS AG in London.

Gold futures for December delivery rose $11.50, or 1.2 percent, to $958.80 an ounce on the Comex division of the New York Mercantile Exchange. Earlier, the price reached $964.60, the highest level for a most-active contract since Aug. 7.

The metal rose 0.4 percent this week and has gained 8.4 this year.

Yesterday, gold assets in ETF Securities’s funds climbed to almost 8 million ounces from 7.96 million ounces.

“The flows have been going into the European-listed gold” products at ETF Securities, said Nicholas Brooks, head of the company’s research in London. Soaring U.S. and U.K. budget deficits may have helped to trigger the demand, he said.

Gold for immediate delivery rose $7.35, or 0.8 percent, to $955.50 an ounce at 3:10 p.m. New York time.

“Gold has been capped under $958 an ounce, so a close over that number would hint at an upturn from recent congestion and spark rallies to challenge $975 resistance,” Ralph Preston, a Heritage West Futures Inc. analyst in San Diego, said in an e- mail.

‘Risk Appetite’

The metal also rose on reports that a Saudi prince spearheading the kingdom’s campaign against terrorism was slightly injured in a suicide bombing carried out by a wanted militant.

“Gold is up on risk appetite and on news of an attack on a member of the Saudi royal family,” Tom Pawlicki, an analyst at MF Global Inc. in Chicago, said in an e-mail.

Silver futures for December delivery rose 56.4 cents, or 4 percent, to $14.815 an ounce, the biggest gain since May 4. The metal rose 4.3 percent this week. The price has climbed 31 percent this year.

To contact the reporter on this story: Claudia Carpenter in London at [e-mail]; Halia Pavliva in New York at [e-mail].

http://www.bloomberg.com/apps/news?pid=20670001&sid=ayPRMwDwGz_0