(Bloomberg News) Gold headed for its best weekly advance since January 2009 after touching its highest price ever above $1,800 an ounce on concern that European and U.S. debt problems may worsen, spurring demand for a haven.
Bullion for immediate delivery is 6 percent higher this week after reaching a record $1,814.95 an ounce yesterday. Gold was little changed at $1,764.50 an ounce at 2:05 p.m. Singapore time, after shedding as much as 0.9 percent earlier as a rebound in equities and higher margins on futures encouraged sales.
"Until we get more resolution of the problems we've seen in Europe and the U.S., I'm not surprised it's bounced back," said Darren Heathcote, Sydney-based head of trading at Investec Bank (Australia) Ltd.
The December-delivery contract was up 0.9 percent at $1,766.40 an ounce, after rising as much as 1.1 percent earlier on the Comex in New York. Futures touched an all-time high of $1,817.60 yesterday and have jumped 7 percent this week.
Gold futures yesterday fell for the first time in four days, losing as much as 2.8 percent, the most in three months. CME Group Inc., the world's largest futures market, boosted gold contract margins, or the minimum amount of cash that speculators and hedgers must keep on deposit, by 22 percent from the close of business yesterday. Both the initial- and maintenance-margin requirements were raised.
The new margin requirements "should push out speculators a bit," Frank Holmes, chief investment officer at U.S. Global Investors Inc., said in an e-mail. "We could easily see a correction between 10 to 15 percent, but ultimately we think gold prices will continue to rise."
Gold has surged since Aug. 5, when Standard & Poor's cut the U.S. credit rating by one level from the top AAA grade. That, coupled with speculation that Europe's sovereign-debt crisis which started in Greece is worsening, triggered a slump in global equities. Regulators in France, Spain, Italy and Belgium will ban short-selling from today to stabilize markets. Short sales are bets on price falls.
Greece will probably report that second quarter gross domestic product contracted for a ninth time in the last 11 quarters, according to estimates by economists in a Bloomberg News survey. In the euro region, industrial production was probably unchanged in June after a 0.2 percent increase in May, economists forecast before a report today.
"I see us continuing to march ahead to the $2,000-and- above mark with everything going on in Europe, the U.S.," Mitchell Krebs, chief executive officer of Coeur d'Alene Mines Corp., said in a Bloomberg Television interview. Coeur d'Alene, based in the city of the same name in Idaho, produces gold and silver.
Platinum traded back above gold after an unexpected drop in U.S. jobless claims eased concern the world's largest economy may slip into recession and boosted the demand outlook for the metal used mainly in autocatalysts. It fell below gold on Aug. 8 for the first time since the collapse of Lehman Brothers Holdings Inc. in 2008 that pushed the world into its worst recession since World War II. Cash platinum last traded 0.8 percent higher at $1,801.50 an ounce.
Spot silver was little changed at $38.74 an ounce, while palladium rose 0.6 percent to $747.38 an ounce.