Gold Increases as Investors Seek Haven From Financial Turmoil

By Glenys Sim

March 2 (Bloomberg) -- Gold gained in Asia as investors deemed five straight days of losses as excessive amid turmoil in the financial markets.

Bullion tumbled 5.1 percent last week and touched $927.76 an ounce, the lowest since Feb. 11, after a rally to $1,006.29 an ounce on Feb. 20 spurred sales of scrap metal. The Standard & Poor’s 500 Index fell to a 12-year low on Feb. 27 as U.S. equities tumbled.

“The market is still consolidating, investors seem to think around $930 is a good entry level for now,” Dick Poon, manager of the precious metals trading desk at Heraeus Ltd., said from Hong Kong today. “Any negative news will continue to drive investors towards a safe haven.”

Immediate-delivery gold climbed as much as $11.35, or 1.2 percent, to $953.70 an ounce, before trading at $950.60 at 9:52 a.m. in Singapore.

Equities slumped after the U.S. Commerce Department said gross domestic product contracted at a 6.2 percent annual pace in the fourth quarter, the fastest in more than a quarter century. Gold is up 7.8 percent this year as the S&P 500 plunged 19 percent in the same period.

“We’re still seeing a lot of scrap coming onto the market, which is keeping a lid on prices,” said Poon. “Jewelry and manufacturing demand is slow, it’s only the ETF demand that’s driving the market now.”

Assets in the SPDR Gold Trust, the biggest such fund backed by bullion, held at a record 1,029.29 metric tons Feb. 27. Holdings in the fund have increased 32 percent since the start of the year as investors sought haven assets.

Among other precious metals for immediate delivery, silver added 0.9 percent to $13.24 an ounce, platinum gained 1.1 percent to $1,085 an ounce, and palladium was up 0.5 percent at $197 an ounce.

To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net