Bloomberg News

Gold Advances on Physical Demand, Silver Rises to Five-Week High

January 23, 2012

Jan. 20 (Bloomberg) -- Gold rose for the third time in four days on increased demand for the precious metal. Silver jumped to a five-week high.

The U.S. Mint already has sold 106,000 ounces of gold coins in January, topping total sales in December of 65,500 ounces. China, Taiwan, Hong Kong, Vietnam and Thailand have boosted gold purchases before the Lunar New Year, according to James Cordier, the founder of Optionsellers.com.

“The physical purchase has given gold some support,” Cordier said in a telephone interview from Tampa, Florida. “People are gradually but surely coming back to precious metals.

Gold futures for February-delivery rose 0.6 percent to settle at $1,664 an ounce at 1:43 p.m. on the Comex in New York. Prices climbed for the third straight week and have had the best start to a year since 2008.

China overtook India in the third quarter as the largest gold-jewelry market, according to the World Gold Council.

‘‘A compelling case for higher gold returns in 2012 can be built on persistent sovereign stress, an expected recession in Europe, benign growth elsewhere, modest outlook for alternative asset classes, persistent low interest rates in the U.S. and expected further rate declines in Europe, and continued central bank appetite for gold,’’ Peter Hickson, an analyst at UBS AG, wrote in a report dated today, forecasting gold will average $2,050 an ounce this year.

Silver for March delivery jumped 3.8 percent to $31.675 an ounce, the most since Jan. 3. Earlier prices climbed to $31.90, highest level since Dec. 13. Prices surged 7.3 percent this week, the most since October.

On the New York Mercantile Exchange, platinum futures for April delivery climbed 0.9 percent to $1,532 an ounce. Still, prices climbed 2.9 percent this week. Palladium futures for March delivery fell 0.4 percent to $675.70 an ounce, the first decline this week.

--Editors: Thomas Galatola, Bob Brennan

To contact the reporters on this story: Debarati Roy in New York at droy5@bloomberg.net;

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net


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