By Sungwoo Park: Sept. 17 (Bloomberg) -- Gold surged to a record, extending its rally, as the dollar’s drop spurred demand from investors for wealth protection. Silver advanced to a 30-month peak and platinum to the highest level since May.
Gold for immediate delivery advanced 0.4 percent to an all- time high of $1,280.80 an ounce and traded at $1,280.75 an ounce at 3:01 p.m. in Singapore. Futures for December delivery climbed to a record $1,282.30 an ounce. Cash silver reached a high of $20.9587 an ounce and platinum $1,620.75. Should silver exceed $21.355, it will reach the highest in about 30 years.
“Uncertainties over the global economic recovery as well as the financial market persist,” said Hwang Il Doo, a senior trader at Korea Exchange Bank Futures co. in Seoul. “Gold is where money should be at this juncture. Now that bullion breached the record again, it will probably continue rising.”
Bullion typically moves inversely to the U.S. currency. The Dollar Index, which measures the greenback’s strength against six major counterparts, lost 2.7 percent this month as the U.S. economic outlook worsened, while gold advanced 2.6 percent.
The metal is set for a 10th annual gain as investors seek protection against the dollar’s decline and the prospect of slowing growth. Gold, traditionally a hedge against rising prices, rallied 17 percent this year amid tame inflation.
The metal has rallied as central banks and governments maintained low borrowing costs and spent trillions of dollars to stimulate economies. President Barack Obama said last week that the U.S. economic recovery has been “painfully slow.” The administration forecasts this year’s deficit will hit a record $1.47 trillion and $1.41 trillion next year.
Gold will average $1,400 in the fourth quarter as “risk aversion and fear take precedence over greed as the outlook for Western economies remains obscured by a myriad of unknowns,” Deutsche Bank AG said in a report on Sept. 10.
Some investors are purchasing gold on expectations that government spending and protracted low interest rates will fan inflation. The Fed’s rate for overnight loans between banks is zero percent to 0.25 percent. The benchmark may not increase until the second quarter, a Bloomberg survey of economists shows.
Silver traded 0.7 percent higher at $20.9425 an ounce and platinum traded up 0.5 percent at $1,620 an ounce. Palladium gained 0.8 percent to $554.25 an ounce.
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