Gold Rises in London, Nears $600, as Oil Gains Spur Fund Buying
April 6 (Bloomberg) — 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.
bloomberg.com