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Silver Reaches 13-Month High


Gold Rises as Dollar Extends Drop; Silver Reaches 13-Month High

By Claudia Carpenter

Sept. 11 (Bloomberg) -- Gold rose in London and New York, heading for a fourth consecutive weekly advance, as a weaker dollar and speculation inflation may accelerate spurred demand for the metal as a hedge. Silver climbed to a 13-month high.

The Dollar Index, a six-currency gauge of the greenback’s value, has dropped for six consecutive days and to its lowest level in almost a year. U.S. consumer prices will drop 1.6 percent this quarter compared with the same period last year before rising 1.4 percent in the fourth quarter and 2 percent in each of the subsequent two quarters, according to the median estimate of economists surveyed by Bloomberg News.

Gold’s gains may continue “given concerns over rising inflation and our expectations for the dollar to weaken further,” Suki Cooper, an analyst at Barclays Capital, wrote in a report today. The bank expects prices to average $940 an ounce this year and $970 next year.

Gold futures for December delivery climbed $6, or 0.6 percent, to $1,002.80 an ounce at 8:22 a.m. on the Comex division of the New York Mercantile Exchange, bringing this week’s gain to 0.6 percent. Prices jumped 5.1 percent the previous three weeks. Metal for immediate delivery rose $4.05, or 0.4 percent, to $1,000.65 an ounce.

December silver futures rose as much as 1.8 percent to $16.97 an ounce, the highest since Aug. 5, 2008. Manufacturing demand for silver, including electronics and other industrial applications, photographic film, jewelry and silverware, will rise 0.2 percent next year, the first increase in three years, according to Barclays.

‘Positive Investment Demand’

“Silver has benefited from positive investment demand and a potential recovery in industrial demand” on signs of economic growth, Barclays said in today’s report.

Stockpiles of the metal in warehouses monitored by Comex dropped 16 percent in the past year while gold stockpiles increased 6.8 percent.

Comex asked traders to refrain from trading for one minute at 8:46 a.m. and 9:03 a.m. in New York, when airplanes crashed into the two World Trade Center towers eight years ago and again at 9:59 a.m. and 10:29 a.m., the times when each tower collapsed, according to a notice to members.

Gold rose to $998.25 an ounce in the morning “fixing,” used by some mining companies to sell production, from $990.75 at the afternoon fixing yesterday.

Demand for gold through exchange-traded funds will rise to 700 metric tons this year, from 322 tons last year, Barclays Capital said in the report. Gold assets in ETF Securities Ltd.’s exchange-traded commodities rose to almost 8.2 million ounces yesterday from 8.1 million on Sept. 9, the company said on its Web site today. That is a record, according to Bloomberg data.

Silver ETF demand will be 3,500 tons this year compared with 2,339 tons last year, Barclays forecast.

Among other precious metals, palladium for December delivery climbed 0.2 percent to $294 an ounce and platinum for October delivery gained 0.6 percent to $1,297.80 an ounce.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ahXC1C.r.2q8