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Gold rises for first day in nine as lower equities spur demand
Gold rose for the first time in nine days in London, rebounding from its longest losing streak since June 2006, as falling stock markets boosted demand for the metal.
Bullion dropped 8.7 percent in the eight sessions through Wednesday from February 20, when it reached an 11-month high of US$1,006.29 an ounce.
Merrill Lynch & Co. Thursday raised its 2009 forecast by 11 percent. European shares and US index futures slid as Chinese Premier Wen Jiabao refrained from announcing an expansion of the government’s stimulus package.
“Gold is really a buying opportunity” because investors remain concerned about stocks, said Bayram Dincer, a commodity analyst at Dresdner Bank in Zurich. Gold is “still favorable over bonds and equities,” he said.
The metal for immediate delivery rose $8.43, or 1 percent, to $914.93 an ounce by 11:45 a.m. local time. April futures added $8.80, or 1 percent, to $915.30 an ounce in electronic trading on the New York Mercantile Exchange’s Comex division.
“Some people were disappointed it could not hold at the $1,000 level,” which triggered selling in the past week, Dincer said. “There is strong support around $900.”
In Vietnam, gold retreated for the third straight day Thursday.
The precious metal’s price at the Saigon Jewelry Joint Stock Co., the country’s biggest gold trader, fell VND30,000 to VND19.2 million a tael, or $915.30 an ounce. A tael is equal to 1.2 ounces.
Growth target
China’s 8 percent growth target for this year is within reach, Wen said Thursday, indicating the government sees no need to increase its stimulus. Governments and central banks are spending trillions of dollars to revive economies, giving rise to concern among some investors about future inflation and adding to bullion’s allure.
The European Central Bank will cut interest rates by half a percentage point to 1.5 percent, the lowest since the European currency was introduced in 1999, according to a Bloomberg survey of economists. Bank of England policy makers will likely halve the UK’s main rate to 0.5 percent, a separate survey shows.
Bullion has gained every year since 2000.
“A surge in inflation expectations in interest rate markets, a rapid increase in credit risk, falling stock markets, and a wave of monetary and fiscal policies are fuelling a gold price rally,” Merrill Lynch wrote in a report. “Things do not get much better than this for gold.”
The bank boosted its forecast for this year’s gold price by 11 percent to $1,000 an ounce. The metal reached an all-time high of $1,032.70 a year ago.
Assets in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, held at a record 1,029.29 metric tons for a fifth day on Wednesday. Holdings in the fund have increased 32 percent since the start of the year.
Bloomberg, Thanh nien
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