Since 1999 as Dollar Drops
Nov. 28 (Bloomberg) -- Gold headed for its biggest monthly advance since 1999 in London as a weaker dollar increased the appeal of the metal as a hedge against further declines in the U.S. currency.
The dollar is poised for a third monthly decline against the yen and its first monthly loss versus the euro since June. Gold prices have also been buoyed by demand for physical metal and exchange-traded funds. Gold demand rose 18 percent in the third quarter, the World Gold Council said this month.
“The dollar weakness is one reason but demand has also turned out to be stronger than expected in the third quarter,” said Dan Smith, a Standard Chartered Plc analyst in London. Gold may reach $850 an ounce by the end of the year, he said.
Gold for immediate delivery fell $2.25, or 0.3 percent, today to $813.55 an ounce as of 11:06 a.m. in London, for a monthly gain of more than 12 percent. That’s the most since September 1999.
December futures were $3.30, or 0.4 percent, higher at $811.80 in electronic trading on the Comex division of the New York Mercantile Exchange.
Gold fell to $813.50 an ounce in the morning “fixing” in London, used by some mining companies to sell production, from $814 at the previous afternoon fixing.
Gold in the SPDR Gold Trust, the largest exchange-traded fund backed by bullion, was unchanged at 758.12 tons, according to data on the company’s Web site. The fund was at a record 770.64 tons on Oct. 13, overtaking Japan as the world’s seventh- largest holder of gold.
Platinum Drops
Among other metals for immediate delivery, silver fell 1.1 percent to $10.25 an ounce. Platinum lost $1.5, or 0.2 percent, to $861.50 and palladium was $3, or 1.6 percent, lower at $189. Platinum and palladium are used in autocatalysts.
Fuji Heavy Industries Ltd., the maker of Subaru-brand cars, said it will cut Japan production by 40,000 units between January and March. Fuji Heavy’s full-year global production will fall to 589,000 units from 649,000 units, a spokesman said yesterday.
U.S. industrywide car sales are headed for the worst year since 1991 as banks cut back on lending and unemployment rises. U.S. automakers led by General Motors Corp. are seeking $25 billion in federal loans to help stave off a financial collapse.
To contact the reporter on this story Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net
Last Updated: November 28, 2008 06:57 EST
