Rubber Advances to 13-Month High as Gold’s Rally Boosts Demand

By Aya Takada

Nov. 12 (Bloomberg) -- Rubber climbed to the highest level in 13 months after gold rallied to a record for a second day, boosting speculation investor demand for commodities will grow.

Futures in Tokyo gained as much as 3.5 percent to the highest level since Oct. 3, 2008. Gold for immediate delivery reached $1,123.38 an ounce as the dollar weakened on speculation U.S. interest rates will remain low, spurring demand for the precious metal as a currency alternative.

“Rubber chased a rally in gold,” Kazuhiko Saito, chief analyst at commodity broker Fujitomi Co. in Tokyo, said today by phone. “Investors will likely increase purchases of commodities as an inflation hedge on signs that central banks will keep interest rates at very low levels.”

April-delivery rubber rose as much as 8.1 yen to 238.7 yen a kilogram ($2,657 a metric ton) on the Tokyo Commodity Exchange before settling at 237.3 yen. Prices gained 74 percent this year.

Rubber on the Shanghai Futures Exchange surged as much as 4.8 percent to 20,685 yuan ($3,030) a ton, the highest level for the most-active contract since September 23, 2008. The March- delivery contract settled at 20,365 yuan.

The market extended gains after data yesterday indicated that China’s economic expansion accelerated, boosting speculation demand will increase in the world’s largest consumer of natural rubber, Saito said.

Industrial Production

China’s industrial production rose 16.1 percent from a year before, the most since March 2008, the statistics bureau said in Beijing yesterday. Retail sales gained an annual 16.2 percent in October, and urban fixed-asset investment climbed 33.1 percent in the first 10 months of this year, it said.

Gold for immediate delivery traded at $1,122.28 as of 4:01 p.m. Tokyo time. The metal has risen 27 percent this year, heading for a ninth annual gain, the longest winning run since at least 1948, as the Dollar Index, a gauge of the greenback’s value against six major currencies, tumbled 7.8 percent.

Federal Reserve Bank of Dallas President Richard Fisher said Nov. 10 that economic growth and inflation may persist below ideal levels into 2011, making the central bank’s current interest-rate stance “appropriate.”

To contact the reporter on this story: Aya Takada in Tokyo atakada2@bloomberg.net