The price of gold in euros and British pounds jumped to a record as both currencies slumped, prompting investors to buy bullion as a store of value. Bullion denominated in pounds has advanced more than 10 percent against spot gold this year, while gold in euro terms climbed about 8.1 percent, as the currencies tumbled on concerns about recovery prospects in Europe. Immediate delivery gold traded at $1,117.97 an ounce at 11:16 a.m. Singapore time.
“The status of gold is very clear; it’s security against any financial turmoil in any country,” Wallace Ng, Hong Kong based executive director of commodity derivatives at Fortis Nederland, said in an interview today. Gold priced in pounds topped 748 pounds ($1,117) an ounce for the first time, after the sterling dropped for a sixth day versus the dollar amid concerns that political uncertainties will hamper efforts to reduce the U.K.’s debt. The precious metal in euros also advanced as the 16-nation currency slid for a second day on concern that Greece will struggle to cut its budget deficit.
Gold traditionally has an inverse relationship with the dollar and a direct relationship with the euro and pound. This relationship has broken down because of a “flight to safety,” according to China International Futures (Shanghai) Co. “In the medium to longer term, gold will target its previous historical high as investors focus on wealth preservation,” China International analyst Li Ning said by phone from Shanghai today.
Bullion reached a record $1,226.56 an ounce on Dec. 3. It has risen 1.9 percent this year even as the dollar jumped 3.9 percent against a basket of six currencies, including the euro and pound. Investors tend to sell gold when the dollar gains as it becomes more expensive for holders of other currencies.
By Glenys Sim. Contact Glenys by email at gsim4@bloomberg.net
Euro/Dollar Cross Video Analysis: Has the Euro Gone Too Far?
Share
No comments:
Post a Comment