Gold rose for a second straight day, heading for a monthly gain, on speculation that concern over Greece’s debt will increase demand for the precious metal as an alternative to holding currency.
Greece may have its sovereign debt rating lowered within months if it fails to meet the objectives in its plan to reduce a budget deficit, Moody’s Investors Service said yesterday. The dollar fell as much as 0.6 percent against the euro after yesterday climbing to near a nine month high.
“You’ve got to look to play gold on the long side,” said Matt Zeman, a metals trader at LaSalle Futures Group in Chicago. “Fiat currencies continue to lose credibility. Even if Greece gets rescued, there will be another country in line with their hands out. People are flocking to gold to shield themselves from the volatility in the currency markets.”
Gold futures for April delivery rose $4.20, or 0.4 percent, to $1,112.70 an ounce at 9:35 a.m. on the New York Mercantile Exchange’s Comex unit. The metal is up 2.6 percent this month, heading for the first monthly gain since November.
The euro has fallen against the most currencies this month except the pound as concern that Greece will struggle to contain its deficit reduced demand for the 16 nation monetary unit.
‘Safe Haven’ Search
“The euro-zone scenario is still lingering in the market,” said Bernard Sin, the head of currency and metals trading at gold refiner MKS Finance SA in Geneva. “People don’t trust the dollar, they don’t trust the euro, so the only way to go is to look at other alternatives such as gold. It’s a safe haven.”
Last year, gold rallied 24 percent, touching a record $1,227.50 an ounce on Dec. 3, as the dollar fell 2.5 percent against the euro. Gold priced in euros reached a record on Feb. 19.
Gold prices are poised for strong gains as a “good hedge against volatile times,” Graham Tuckwell, the chairman of ETF Securities Ltd., said today on Bloomberg Television. There’s “a lot of safety in commodities, particularly in gold,” he said, adding that he sees “substantial upside” for bullion.
India raised import duties on gold to 300 rupees ($6.51) per 10 grams, from 200 rupees, Finance Minister Pranab Mukherjee said today in his budget presentation. That may cut domestic demand, according to Rajesh Exports Ltd. Chairman Rajesh Mehta.
Silver futures for May delivery in New York rose 7.8 cents, or 0.5 percent, to $16.21 an ounce. Platinum for April delivery gained $4.40, or 0.3 percent, to $1,535.60 an ounce. Palladium for June delivery advanced $5.15, or 1.2 percent, to $430.65 an ounce.
To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.
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