Gold rebounded from the lowest level in almost four weeks in London as debt concerns in the U.S. and Europe spurred demand for the metal as a protection of wealth.
A U.S. Congress budget supercommittee failed to reach agreement on reducing the budget deficit and data today may show European consumer confidence sank to a two-year low, according to a Bloomberg News survey of economists. Holdings in exchange- traded products backed by gold climbed to a record yesterday as prices dropped 2.7 percent, the most in eight weeks.
“We’re seeing a bit of physical buying” after yesterday’s drop, Afshin Nabavi, a senior vice president at bullion refiner MKS Finance SA in Geneva, said today by phone. “I remain positive on gold because of all the mess going on in the world.”
Immediate-delivery gold gained $17.43, or 1 percent, to $1,694.75 an ounce by 11 a.m. in London. Prices yesterday fell to $1,667.03, the lowest since Oct. 25. Gold for December delivery was up 1 percent at $1,695.40 on the Comex in New York.
Bullion is in the 11th year of a bull market and prices reached a record $1,921.15 an ounce on Sept. 6 as investors sought to diversify away from equities and some currencies amid debt crises and concerns about slowing economic growth. Holdings in gold-backed exchanged traded products climbed 2 metric tons yesterday to an all-time high of 2,341.94 tons, data compiled by Bloomberg show.
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Oil Gains First Day in Four in New York as U.S. Expands Sanctions on Iran
Oil rose for the first time in four days as new sanctions against Iran raised concern that supplies may be disrupted, while affirmations of U.S. credit ratings and economic growth forecasts for China signaled continuing demand growth in the world’s two largest consumers of crude.
Futures climbed as much as 1.6 percent in New York after the U.S., the U.K. and Canada expanded measures aimed at thwarting Iran’s nuclear program. Standard & Poor’s and Moody’s Investors Service affirmed their credit ratings for the U.S. The World Bank said China is heading for growth in excess of 8 percent next year and has fiscal scope to cushion its economy from an escalation in Europe’s debt crisis.
“Economic sanctions will increase internal tension in Iran, where inflation is a major problem,” said Filip Petersson, an SEB AB commodity strategist in Stockholm. “A further destabilization could very well lead to an uprising in the long run.”
Crude for January delivery gained as much as $1.53 to $98.45 a barrel in electronic trading on the New York Mercantile Exchange. It was at $98.29 at 11:24 a.m. London time. Yesterday, the contract slid 75 cents to $96.92, the lowest settlement since Nov. 9. Prices have gained 7.6 percent this year after increasing 15 percent in 2010.
Brent oil for January settlement on the London-based ICE Futures Europe exchange increased as much as $1.30, or 1.2 percent, to $108.18 a barrel. The European contract was at a $9.75 premium to New York crude. The spread reached a record $27.88 on Oct. 14.
Sanctions on Iran
The U.S., the U.K. and Canada targeted Iran’s central bank and oil industry yesterday with sanctions aimed at cutting the regime off from international financial transactions. The actions are in response to a Nov. 8 United Nations atomic agency report concluding that previous sanctions have not stopped the regime from clandestine nuclear-bomb work.
The new sanctions target companies that provide goods or services to Iran’s oil and gas industries. Existing U.S. laws have forced most international oil companies out of Iran and the new measures aim to stop it from obtaining technology and money from smaller foreign companies.
“It will be difficult to sanction oil exports,” said Petersson at SEB. Industrialized countries “are unlikely to be willing to induce an oil crisis under current economic conditions,” he said.
