Gold, Near $1,500 an Ounce, Trades Little Changed in London; Silver Slips
Kyoungwha Kim and Maria Kolesnikova, On Tuesday April 19, 2011, 5:50 am EDT
Gold was little changed in London trading, remaining close to $1,500 an ounce, after prices rose to a record yesterday for a third consecutive day.
Bullion surged yesterday after Standard & Poor’s downgraded the U.S. credit outlook. The 14-day relative strength index, a gauge of whether a commodity is overbought or oversold, rose to 71.204, above the level of 70 that some analysts who study technical charts view as a sign that prices are poised to drop.
The “uptrend is well intact and we expect any pullback to be very limited,” VTB Capital analyst Andrey Kryuchenkov said in a report today. “The downside is limited, with the focus on the euro zone peripheral debt as well as U.S. monetary policy expectations."
Immediate-delivery bullion gained 32 cents to $1,495.63 an ounce by 10:32 a.m. in London, after touching an all-time high of $1,497.90 an ounce yesterday. Gold for June delivery in New York rose 0.2 percent to $1,496.30 an ounce after reaching a record $1,498.60 yesterday.
Gold prices may keep rising for ‘‘some years into the future,’’ Blackrock Inc. (BLK) fund manager Evy Hambro said in an interview with Mark Barton on Bloomberg TV’s ‘‘On the Move.’’ Bullion’s fundamentals are supportive of current price levels, Hambro said.
‘Comfortably Underpinned’
S&P said the U.S. government risks losing its AAA credit rating, citing ‘‘material risk’’ that policy makers won’t reach an accord on ‘‘medium- and long-term budgetary challenges.’’ The move followed last week’s downgrade by Moody’s Investors Service of Ireland’s credit rating by two notches to the lowest investment grade.
Gold has gained in the last 10 years on increased investment demand for commodities and on concern that currencies may be debased as central banks stimulate their economies. Unrest in the Middle East, sovereign-debt turmoil in Europe and Japan’s nuclear crisis have bolstered sales, propelling bullion 32 percent higher in the past year.
Additional support for gold came from quickening inflation that has prompted policy makers across the globe to raise interest rates. Consumer prices in China rose at their quickest pace since 2008 in March, exceeding the government’s 2011 target for a third month.
Inflation in the 17-nation euro region quickened to 2.7 percent from 2.4 percent in February, the European Union’s statistics office said last week. U.S. wholesale costs rose 5.8 percent in March compared with a year earlier, and the government said that the cost of living rose for a ninth month.
‘‘Growing fears of rising inflation and a weak dollar continue to benefit gold and silver,” Marc Ground, an analyst with Standard Bank, wrote in a note. “Inflation-hedge buying is providing the main impetus.”
Silver Slides
Total gold demand gained for a third year in 2010, led by a 66 percent jump in sales of gold bars to a record 880.5 metric tons, according to researcher GFMS. Gold held in exchange-traded products rose 0.36 tons to 2,070.32 tons yesterday, the highest level since Jan. 24, data compiled by Bloomberg from 10 providers show.
Silver for immediate delivery fell 0.3 percent to $43.27 an ounce after rallying as much as 1.2 percent to $43.525 an ounce yesterday, the highest price since 1980. Palladium was up 1 percent at $743.25 an ounce and platinum rose 0.3 percent to $1,787 an ounce.