Gold Gains in Asia on Haven Demand After U.S. Job Losses Mount

By Glenys Sim and Jason Scott

July 3 (Bloomberg) -- Gold advanced in Asia after mounting unemployment in the U.S., the world’s largest economy, raised concerns about a protracted recession, prompting investors to seek the precious metal to preserve their wealth.

Employers in the U.S. cut more jobs than forecast in June and the unemployment rate rose to the highest in almost 26 years, triggering the biggest drop since April 20 in the Dow Jones Industrial Average yesterday. Asian stocks fell for a third day, with the MSCI Asia Pacific Index down 0.3 percent today.

“The jobs data out of the U.S. is going to reignite fears among investors that the global economic recovery will be slower than expected,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. “When investors become risk-averse they retreat out of equity markets and into gold.”

Bullion for immediate delivery rose as much as 0.4 percent to $933.90 an ounce, before trading at $933.55 at 2:44 p.m. in Singapore. Gold for August delivery increased 0.3 percent to $933.60 on the New York Mercantile Exchange’s Comex unit.

“Recently investors have started to credit gold also with the monetary role again,” Ronald Peter Stoeferle, an analyst at Erste Group Bank AG, said in a report. The metal “locks in the purchase power and thus the value over long periods of time.”

Still, bullion is down 0.6 percent this week as the dollar headed for a weekly gain against the euro after the rise in unemployment in the U.S., and also in Europe, added to speculation the global recession will be prolonged. The precious metal tends to move inversely to the U.S. currency.

Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, was unchanged for a second day at 1,120.55 metric tons yesterday, the company’s Web site showed.

Among other precious metals for immediate delivery, silver gained 0.2 percent to $13.45 an ounce, platinum was up 0.2 percent at $1,188.50 an ounce and palladium lost 0.6 percent to $250.50 an ounce at 2:30 p.m. in Singapore.

To contact the reporters on this story: Glenys Sim in Singapore at gsim4@bloomberg.net; Jason Scott in Perth at Jscott14@bloomberg.net;