Gold Little Changed After Gain Over $1,000, Highest Since March

By Claire Leow

Feb. 23 (Bloomberg) -- Gold was little changed after rallying above $1,000 an ounce last week for the first time in almost a year as investors sought a haven from slumping equities.

Gold for immediate delivery traded at $987.03 an ounce after reaching $1,006.29 on Feb. 20, the highest since March. The metal has soared 45 percent from an October low of $682.41 as investor confidence in financial assets eroded and central banks pumped trillions of dollars into the banking system.

Investors are protecting their wealth by turning to gold from the Japanese yen, Morgan Stanley currency strategist Ned Rumpeltin said in a report. The yen has gained 18 percent in the past six months, the only major currency to advance against the dollar, almost matching the 20 percent gain in gold.

“In place of the Japanese yen, gold has made a comeback as a safe haven of choice” for some investors, the report said. Japan’s fourth quarter contraction of 13 percent at an annual rate, caused by a 35 percent shrinking of exports from a year earlier, “has seen some investors call the yen’s safe haven status into question.” The yen fell 1.6 percent last week.

Global stocks tracked by the MSCI World Index of 1,684 stocks dropped for a second week last week, chalking up an 11 percent decline in two weeks on concern the economic slump may worsen. Investor demand for a haven has pushed gold holdings in exchange-traded funds to records.

Investor Demand

Investment demand for bullion, including exchange-traded funds, coins and bars, almost tripled to 399 tons in the fourth quarter as total demand climbed 26 percent to 1,036.5 tons, the London-based World Gold Council said on Feb. 18.

Platinum for immediate delivery was little changed at $1,081 an ounce at 11:58 a.m. Singapore time after gaining in each of the past five weeks. Silver for immediate delivery declined 0.6 percent to $14.35 an ounce. The metal has surged 26 percent this year and is the best performer among the 26 contracts on the UBS Bloomberg Constant Maturity Commodity Index. The metal fell 23 percent in 2008.

To contact the reporter for this story: Claire Leow in Singapore at cleow@bloomberg.net