Gold nears record as investors seek refuge

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Gold nears record as investors seek refuge

Gold may advance to a record as investors take refuge in the precious metal to protect their wealth from Europe's financial turbulence.

Bullion for immediate delivery climbed as much as 0.3 per cent to $US1248.35 an ounce before trading little changed at 1244.75 an ounce in Singapore. The metal jumped as much as 1.8 per cent to $US1251.25 yesterday, near an all-time high of $US1252.11 on June 8. Gold futures for August delivery fell 0.2 per cent to $US1246.50.

''We are still very bullish on gold,'' said Hwang Il Doo, a senior trader with KEB Futures in Seoul. ''Gold will remain the main beneficiary of what's happening in Europe unless the picture takes a turn for the better.''

Gold is up 14 per cent this year, outperforming stocks, bonds and other commodities, as investors seek to safeguard their wealth against the crisis in Greece and other European countries struggling to repay debt.

Holdings in exchange-traded funds backed by bullion reached records, keeping the precious metal on course for a 10th annual gain, the longest winning streak since at least 1920. Gold denominated in euros, UK pounds and Swiss francs has climbed to records this year.

Eighteen of 20 traders, investors and analysts surveyed by Bloomberg, or 90 per cent, said bullion would rise next week. None forecast lower prices and two were neutral.

'Healthy shape'

The euro has slumped 14 per cent against the dollar this year, while the MSCI World Index of shares is down 4.7 per cent. The LME Index of six industrial metals slumped 12 per cent on concern debt-cutting measures by European nations will slow growth in the global economy.

European policy makers must rein in their budget deficits and publish stress tests on banks because the financial package designed to fight the region's debt crisis only buys them time, World Bank President Robert Zoellick said yesterday.

''Gold is in very healthy shape,'' said Wallace Ng, Hong Kong-based executive director with Fortis Nederland. ''Gold prices are well positioned to make new highs.''

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Assets in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, increased 1.83 metric tons to a record 1307.96 tons yesterday, according to figures on the company's website. Gold will average $US1190 an ounce this year, up from a previous forecast of $US1,150, BNP Paribas said this week. It averaged $US973.67 in 2009.

Silver for immediate delivery was little changed at $US18.73 an ounce and palladium fell 0.2 per cent to $US481 an ounce, while platinum was declined 0.2 per cent to $US1574.75 an ounce.

Bloomberg

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