By Glenys Sim
Feb. 18 (Bloomberg) -- Gold declined in Asia after climbing to the highest price since July as the deepening global financial crisis drove investors to buy gold as a store of value.
Low interest rate environments and spending by governments also prompted investors to purchase gold as an alternative to declining currencies. Gold priced in euros, pounds, Australian and New Zealand dollars, and South African rand all hit records yesterday.
“Safe haven or flight-to-quality demand remains the driving force behind rising gold prices, as global economic and financial market uncertainties continue,” Toby Hassall, research analyst at Commodity Warrants Australia, said in a weekly note today.
Gold for immediate delivery fell 0.2 percent to $968.21 an ounce at 10:17 a.m. in Singapore. The metal rose to $974.20 yesterday, the highest since July. Gold for April delivery was little changed at $969.30 in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.
“Investment demand for gold is also benefiting from increased inflationary concerns resulting from expansionary monetary and fiscal policies,” said Hassall.
Gold holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, gained to a record 1,008.8 metric tons as of yesterday, placing it just behind the 1,040 tons held by Switzerland, the world’s sixth-largest stockpile.
December-delivery gold in Tokyo was up 0.7 percent at 2,873 yen a gram ($969 an ounce), while Shanghai gold for June delivery gained 0.8 percent to 212.52 yuan a gram ($965 an ounce).
Gold Record
Gold futures in Dubai and India also climbed to their highest yesterday, tracking gains in the international markets.
Bullion for April delivery on the Dubai Gold and Commodities Exchange surged to $970.00 per ounce yesterday, the highest since the exchange began trading gold futures in 2006. April-delivery gold on the Multi Commodity Exchange of India Ltd. gained to 15,563 rupees ($313) for 10 grams, the highest since trading started in 2003.
“As government treasuries increase money supply and central banks lower the price of money via interest rate reductions, the relatively finite supply of gold means the yellow metal is less prone to devaluation in high inflation environments,” said Hassall. “Silver prices should also benefit from strong investment demand which is likely to more than offset weak industrial demand prospects.”
Among other precious metals for immediate delivery, silver fell 0.5 percent to $14.06 an ounce, platinum was little changed at $1,092.50 an ounce, and palladium declined 0.3 percent to $218.75 an ounce as of 9:56 a.m. in Singapore.
To contact the reporter on this story: Glenys Sim in Singapore at Gsim4@bloomberg.net
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