Gold Jumps to Record as Slumping Dollar Spurs Investment Demand

By Nicholas Larkin and Glenys Sim

Nov. 23 (Bloomberg) -- Gold jumped to a record in London and New York as a slumping dollar boosted bullion’s appeal as an alternative asset. Other precious metals also gained.

The U.S. Dollar Index, a gauge of the greenback’s value against six currencies, slid as much as 0.8 percent after Federal Reserve Bank of St. Louis President James Bullard said he supported extending the central bank’s purchases of mortgage- backed securities. Bullion climbed 32 percent this year as the currency index dropped 7.7 percent. Russia’s central bank said it bought more gold last month.

“All this buying shows no confidence in the dollar,” said Bernard Sin, head of currency and metals trading at bullion refiner MKS Finance SA in Geneva. “We’re going to see some physical demand in the festive season,” which may push prices to $1,200 an ounce, he said.

Gold for immediate delivery climbed as much as $17.28, or 1.5 percent, to $1,167.88 an ounce and traded at $1,166.03 by 11:27 a.m. in London. Gold futures for December delivery on the New York Mercantile Exchange’s Comex division increased 1.7 percent to $1,165.80 an ounce, the seventh advance in a row, after reaching $1,167.80.

The metal rose to a record $1,166 in the morning “fixing” in London, from $1,140 at the afternoon fixing on Nov. 20. Some mining companies use fixings to sell production. The metal denominated in sterling also reached a record today, climbing as high as 703.24 pounds an ounce.

‘Investor Interest’

“Investor interest has spilled over from those seeking a hedge against the dollar to other buying interests, such as central-bank buying,” said Stefan Graber, an analyst at Credit Suisse Group AG in Singapore.

Gold rallied 10 percent in the past month and is heading for a ninth annual gain, the longest winning run since at least 1948. India’s purchase of 200 metric tons from the International Monetary Fund spurred speculation other central banks will follow suit. Central banks are the biggest holders of gold.

Russia’s central bank increased its gold holding to 19.5 million ounces last month from 19 million ounces the month before, Bank Rossii said on its Web site.

Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, were unchanged for a second day at 1,117.49 tons on Nov. 20, according to its Web site. The fund’s holdings reached a record 1,134 tons on June 1.

American Eagle

Sales of American Eagle gold coins by the U.S. Mint almost doubled in the first 10 months to 1.07 million ounces, data on its Web site showed. The mint sold 99,500 ounces of the coins so far this month. The U.K.’s Royal Mint last week said it quadrupled production of gold coins in the third quarter.

Among other precious metals for immediate delivery in London, silver climbed as much as 2.1 percent to $18.89 an ounce, a 16-month high, and last traded at $18.82. Platinum gained as much as 1.9 percent to a 14-month high of $1,473.75 an ounce and was last at $1,470.50. Palladium rose 2.2 percent to $372.23 an ounce.

Silver held in ETF Securities Ltd.’s exchange-traded products rose 0.4 percent to a record 22.634 million ounces on Nov. 20, according to the company’s Web site. Platinum holdings added 0.2 percent to a record 425,799 ounces, while palladium assets increased 1.3 percent to a record 602,793 ounces.

To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net