April 6, 2006
BloombergBy James Attwood
Gold rose in London, approaching $600 for the first time since 1980, as investors bought bullion to hedge against rising oil prices amid concern over disruption to energy supplies.
Crude oil gained for a second day in New York as declining gasoline stockpiles before the peak U.S. summer-driving season added to concern about reduced supplies from Nigeria and Iran. Money in index-linked commodity funds will rise 38 percent this year to $140 billion, according to Barclays Capital.
``Rising oil prices and the political concerns are flowing into gold prices,'' Gerard Burg, a commodity economist at National Australia Bank Ltd., said in Melbourne. ``Investors are the real factor driving the gold prices.''
Gold for immediate delivery in London rose as much as $8.45, or 1.4 percent, to $596.95 an ounce, the highest since January, 1981. It traded at $594.80 at 12:49 p.m. local time. The metal rose to $602.50 on Dec. 23, 1980.
Funds have been the biggest buyers in 2006, outpacing purchases by jewelers, who accounted for 73 percent of demand last year, the London-based World Gold Council said in a March 29 newsletter.
Some investors buy gold to preserve purchasing power as inflation increases. The precious metal surged to $873 an ounce in New York in 1980, when consumer prices jumped more than 12 percent.
``Commodities are the flavor of the month,'' David Gornall, head of foreign exchange and bullion at Natexis Commodity Markets Ltd. in London, said in an interview. ``Gold, silver, zinc or copper, it doesn't really matter what it is, as long as it's a commodity.''
OIL RALLY
Crude oil for May delivery rose as much as 67 cents, or 1 percent, to $67.76 a barrel in after-hours electronic trading on the New York Mercantile Exchange.
Oil has risen from a two-month low in mid-February after rebel attacks in Nigeria cut oil output there by more than a quarter. Traders are also concerned Iran, the world's fourth- largest producer, may cut exports if the United Nations Security Council imposes sanctions to halt the Islamic republic's nuclear program.
Gasoline supplies fell by 4.4 million barrels last week, the U.S. Energy Department said yesterday, more than twice the drop analysts surveyed by Bloomberg News had predicted. Gasoline and diesel output declined as refineries cut production so they could perform maintenance operations.
Among other precious metals for immediate delivery in London, silver rose 28 cents to $11.99 an ounce. Earlier it gained as much as 38 cents, or 3.2 percent, to $12.09, the highest since September, 1983.
Platinum gained $16.50, or 1.5 percent, to $1,087.50. Palladium traded at $355.50 an ounce. It earlier climbed as high as $21.25, or 6.3 percent, to $360 an ounce, the highest since August 2002.
To contact the reporters on this story:
Tan Hwee Ann in Melbourne at hatan@bloomberg.net;
Danielle Rossingh in London drossingh@bloomberg.net.
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