Sept. 16 (Bloomberg) -- Gold rose to a record settlement price on speculation that a global economic recovery will stoke inflation. Silver jumped to a 13-month high as the dollar’s slump boosted demand for metals as alternative investments.
The worst U.S. recession since the 1930s has probably ended, Federal Reserve Chairman Ben S. Bernanke said yesterday. The dollar slid to its lowest level in almost a year against a basket of six major currencies as the economic outlook reduced demand for the greenback as a haven. Gold futures were 1.3 percent below an intraday record $1,033.90 set in March 2008.
“The dollar is being attacked on all sides,” Miguel Perez-Santalla, a sales vice president at Heraeus Precious Metals Management in New York, said in an e-mail. “The commodities are gaining on their already powerful momentum. It is all technical and investment buying.”
Gold futures for December delivery advanced $13.90, or 1.4 percent, to $1,020.20 an ounce on the Comex division of the New York Mercantile Exchange. Earlier, the price reached $1,023.30, the highest since March 17, when the metal climbed to the record.
Bullion for immediate delivery climbed 0.9 percent to $1,016.52 at 3:10 p.m. New York time. The Reuters/Jefferies CRB Index of 19 raw materials has gained 15 percent this year after tumbling 36 percent in 2008.
Inflation expectations are rising after central banks cut borrowing costs and the Group of 20 nations pledged about $12 trillion to spur their economies. Precious metals have soared this year as investors sought to shield their wealth against inflation and a declining dollar.
‘Inflation Story’
“The inflation story has got people very concerned,” said Bernard Sin, the head of currency and metals trading at bullion refiner MKS Finance SA in Geneva. “People are trying to move dollars into commodities, especially gold. The market is really concerned about the behavior of the dollar.”
Wholesale prices in the U.S. rose more than twice as much as forecast in August, led by gasoline costs that have since partially receded, according to government figures released yesterday. The 1.7 percent increase in prices paid to factories, farmers and other producers was the fourth gain in five months, the Labor Department said.
“Fundamentals are still generally negative, and the market is overbought,” Tom Pawlicki, an analyst at MF Global Inc. in Chicago, said in an e-mail. “However, prices should make gradual improvements on recent trading ranges due to expectations for higher inflation down the road and due to potential weakness in the dollar.”
Gold has climbed 15 percent this year as the dollar dropped 6.2 percent against the currency basket.
Inflation ‘Vengeance’
“Given the commitment of governments and central banks to avoid a deflationary depression at all costs, it is only a matter of time until inflation returns with a vengeance,” Mike Stuart, an analyst at Numis Securities Ltd. in London, said in a report. “Without surging inflation fears, a sustained move over $1,000 would require a continued steady fall in the dollar.”
On the Comex, bets that prices will rise, or net-long positions, jumped 22 percent to a record 224,676 contracts in the week ended Sept. 8, government data showed last week.
“Funds keep pushing, but the size of the long position is truly worrisome, and the market might deal surprises to late- comers and trend-followers,” Jon Nadler, a senior analyst at Kitco Inc. in Montreal, said via e-mail. “One-way market streets have not yet been invented.
Silver Climbs
Silver futures for December delivery rose 43 cents, or 2.5 percent, to $17.43 an ounce on the Comex. Earlier, the price reached $17.58, the highest level since Aug. 4, 2008. The metal has gained 54 percent this year.
Platinum futures for October delivery gained $29.80, or 2.3 percent, to $1,350.10 an ounce on the Nymex. The price reached $1,351.60, the highest level in a year.
Palladium futures for December delivery rose $4.25, or 1.4 percent, to $300.50 an ounce. Earlier, the price reached $304.80, the highest level since Sept. 2, 2008.
Platinum gained 43 percent this year, and palladium jumped 59 percent.
‘‘Platinum has the best long-term supply-and-demand fundamentals out of all the precious metals,’’ John Reade, the head metals strategist at UBS AG in London, said in a note.
Platinum and palladium are used in jewelry and pollution- control devices in cars.
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