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9.07.2010

Silver Is Near 2 1/2 Year High

Gold May Gain as Metals Advance; Silver Is Near 2 1/2-Year High

(Bloomberg) -- Gold, little changed in London, may gain as rising prices of other metals boost demand. Silver traded near the highest level in almost 2 1/2 years.

Five of the six main industrial metals on the London Metal Exchange rose, led by zinc, after a report last week showed U.S. employers added more jobs than estimated. The dollar dropped to a two-week low against the euro before rebounding. Gold, which usually moves inversely to the greenback, is trading 1.2 percent below a record.

Stronger prices for other metals are “spilling over into gold,” Peter Fertig, owner of Quantitative Commodity Research Ltd. in Hainburg, Germany, said today by phone. “A weaker dollar is usually a supportive factor for gold. It’s expected to be a quieter day for gold” because of a U.S. holiday, he said.

Immediate-delivery bullion added $2.80, or 0.2 percent, to $1,249.55 an ounce at 4:32 p.m. in London. Prices gained 0.7 percent last week. Gold for December delivery was little changed at $1,251.20 in electronic trading on the Comex in New York. Comex floor trading is closed today for the Labor Day holiday.

The metal was little changed at $1,249 an ounce in the afternoon “fixing” in London, used by some mining companies to sell output, from $1,249.50 at today’s morning fixing. Spot prices climbed the past five weeks, the longest winning streak since September last year.

Bullion has advanced 14 percent this year, reaching a record $1,265.30 an ounce on June 21. The price is set for a 10th annual gain as investors seek to protect their wealth against financial turmoil in Europe and the prospect of slowing economic growth.

‘Sentiment Remains Bullish’

U.S. private payrolls climbed 67,000 in August after a revised 107,000 increase in July, Labor Department figures showed Sept. 3. The median forecast of economists in a Bloomberg News survey was for 40,000 more positions. Gold’s losses were limited on Sept. 3 after a U.S. report showed service industries expanded in August at the weakest pace in seven months.

“Gold will continue trying to break the record,” said Hwang Il Doo, a senior trader at Korea Exchange Bank Futures Co. in Seoul. “Once it breaks it, bullion will shoot up. Sentiment remains bullish.”

An index measuring sentiment in the 16-nation euro region slid to 7.6 in September from 8.5 in August, according to a report from the Sentix research institute. Economists in a Bloomberg survey had forecast an increase to 9.0.

Assets in the SPDR Gold Trust, the biggest exchange-traded product backed by bullion, were little changed at 1,294.44 metric tons on Sept. 3, figures on the company’s website showed. Holdings touched a record 1,320.44 tons in June.

Jewelry Demand

“An anticipated pickup in gold demand for jewelry use in September and expectations for inflation may support” prices, Lee Suk Jin, a commodities analyst at Seoul-based Tong Yang Securities Inc., wrote in a report today. Households in India, the biggest gold user, typically increase jewelry purchases in the year’s final months to mark festivals and weddings.

Silver for immediate delivery in London was little changed at $19.9063 an ounce. The metal reached $19.9225 on Sept. 3, the highest price since March 2008. Platinum gained as much as 0.7 percent to $1,566.75 an ounce, the highest price since Aug. 9, and was last at $1,560.80. Palladium was little changed at $529.50 an ounce after rising as much as 0.7 percent to $533.25, the highest level since May 14.

Silver, platinum and palladium “reflect both an urge to own insurance and an urge to hedge in favor of further global economic growth,” said Dennis Gartman, an economist and the editor of the Suffolk, Virginia-based Gartman Letter.