Continuous European debt and faster global inflation keeps gold at record high levels. Uncertainty in the euro zone and global inflation concerns will keep gold and their current record high levels.
By Nicholas Larkin and Kim Kyoungwha
Apr 18, 2011 1:48 AM MT
Gold was little changed after reaching a record in London and New York as concern about European debt and faster inflation boosted demand for the metal as an alternative investment. Silver touched a 31-year high.
China increased banks’ reserve requirements to cool inflation that quickened in March to the fastest pace since 2008. The euro weakened against the dollar on speculation Greece will be unable to avoid a default. Unrest in the Middle East and North Africa and concerns about Japan’s nuclear crisis also helped gold’s gain this year.
“Resurfacing debt concerns in the euro zone will be bullion supportive in the short run,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said in a report to clients. “Renewed inflation concerns” are supporting prices, he said.
Immediate-delivery bullion rose as much as $1.98, or 0.1 percent, to $1,488.68 an ounce and was little changed at $1,485.30 by 9:12 a.m. in London. Gold for June delivery was 30 cents lower at $1,485.70 an ounce on the Comex in New York after reaching a record $1,489.70.
The cost of insuring Greek government debt rose to a record on April 15. “Restructuring is not an issue we’re discussing,” Greek Finance Minister George Papaconstantinou said in an April 16 interview in Washington. Greece received a bailout from the European Union and the International Monetary Fund last year, and has been followed by Ireland and Portugal in seeking aid.
Reserve ratios will rise a half point from April 21, the People’s Bank of China said on its website yesterday. The European Central Bank this month raised interest rates from a record low as inflation in the region quickened to 2.7 percent in March, the fastest pace since October 2008.
The “uncertainty in the euro zone and inflation concerns in Asia appear to be the main drivers” of the price, said David Thurtell, Singapore-based head of metals research at Citigroup Inc. “The latter was confirmed by the overnight move by the People’s Bank of China to tighten monetary policy.”
Libyan rebels repelled an attack from forces loyal to Muammar Qaddafi on the city of Ajdabiya, defending the front line that runs between the country’s two biggest cities. Rebels have struggled for weeks to take and hold cities in central Libya. Yemen’s opposition coalition rejected a plan by six Gulf states to end unrest in the Arabian country, saying that the swift departure of Yemen’s President Ali Abdullah Saleh isn’t negotiable.
Gold held in exchange-traded products rose 19.29 metric tons to 2,069.95 tons on April 15, the highest level since Jan. 24, data compiled by Bloomberg from 10 providers show.
Silver for immediate delivery climbed as much as 0.9 percent to $43.3725 an ounce, the highest price since January 1980, the year the metal reached a record $50.35 in New York. It was last little changed at $43.0188 and has surged 39 percent in 2011.
Palladium was down 0.3 percent at $763.25 an ounce. Platinum declined 0.3 percent to $1,787 an ounce.
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