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Gold Rises on Inflations Concerns, Rebounding Equity Markets
By Millie Munshi
March 15, 2007
March 15 (Bloomberg) -- Gold prices in New York rose the most in a week, after equity markets rebounded and U.S. producer prices climbed in February by the most in three months, reviving demand for the metal as a hedge against inflation.
Prices paid to U.S. producers rose 1.3 percent last month, more than forecast, amid higher energy costs. Prices climbed 2.5 percent from a year earlier, compared with a 0.2 percent year- to-year gain in January. Gold has gained 17 percent in the past year, partly on inflation concerns. U.S. stocks climbed for the second day in a row.
``The inflation numbers are obviously a bullish sign for gold,' said Emanuel Balarie, a senior market strategist at Wisdom Financial Inc. in Newport Beach, California. ``Gold has also been tracking the equity markets.''
Gold futures for April delivery rose $4.60, or 0.7 percent, to $647.10 an ounce on the Comex division of the New York Mercantile Exchange. The percentage gain was the most since March 7.
Before today, gold had dropped 6.5 percent since Feb. 27, when Chinese stocks tumbled the most in 10 years, helping to spur a worldwide rout in shares.
``Gold is going to start decoupling from the equity markets because the sell-off was fundamentally really unwarranted,'' Balarie said.
Gold will rise 6 percent this year to a record average $645 an ounce, boosted by demand from jewelers and investors, CPM Group said today in its annual-outlook report.
The metal may test the record $873 an ounce from January 1980 before falling in the second half, Jeff Christian, CPM managing director, said today at an investor presentation in New York `Spike Higher'
``I would not be surprised to see gold prices spike sharply higher in the next two to three months,'' he said.
Silver for May delivery gained 24.5 cents, or 1.9 percent, to $13.075 an ounce. The percentage increase was the most since Feb. 23. Prices have gained 27 percent from a year ago.
Platinum and palladium futures also rose. A futures contract is an obligation to buy or sell a commodity at a fixed price for delivery by a specific date.
To contact the reporter on this story: Millie Munshi in New York at mmunshi@bloomberg.net
Futures and options trading involve substantial risk.
