Gold advanced, heading for the best monthly gain since November 2009, as tensions in the Middle East and costlier oil increased demand for precious metals as a protector of wealth and hedge against inflation.
Bullion for immediate-delivery climbed as much as 0.3 percent to $1,415.15 an ounce, and traded at $1,414.05 at 2:08 pm in Singapore, set for a 6.1 percent advance in February. The April-delivery contract increased as much as 0.5 percent to $1,415.60 an ounce in New York. Oil prices jumped as much as 2.1 percent to $99.96 a barrel on the New York Mercantile Exchange.
Gold is “moving in the same direction as oil due to increased safe-haven buying from unrest in Libya and spreading unrest in other key Middle East oil producers,” Mark Pervan, an analyst at ANZ Banking Group Ltd, wrote in a note to clients.
US officials will meet with their overseas counterparts in Geneva on Monday to discuss the fate of Libya, including measures to pressure Muammar Qaddafi out of power and build ties with the nation’s opposition leaders.
The United Nations’ Security Council voted 15-0 on February 26 to freeze the overseas assets of Qaddafi and four aides and to bar them from travelling to try to halt the violence in Libya that has left more than 1,000 people dead.
“Gaddafi still has enough firepower to create chaos and plunge the country into civil war,” said Ong Yi Ling, a Singapore-based analyst with Phillip Futures Pte Ltd. “High oil and gold prices may be warranted until the situation in the Middle East shows some definite signs of improvement.”
In Oman, two demonstrators were killed in clashes with police on Sunday, according to hospital and government officials. The country is the largest Middle East oil producer that isn’t a member of the Organisation of Petroleum Exporting Countries.
Should gold breach resistance of $1,420 an ounce, the market may “witness a new record high,” Phillip Futures’ Ong said. The spot price peaked at $1,431.25 in December. So-called resistance levels mark areas where sell orders may be clustered.
Sixteen of 20 traders, investors and analysts surveyed by Bloomberg, or 80 percent, said the metal will gain this week. Gold rose 30 percent last year as investors sought to preserve their wealth against currency debasement and rising inflation.
Hedge funds boosted their bullish bets on gold to the highest since December, when the precious metal was headed to the record price.
Managed-money funds held net-long positions, or wagers on rising prices, totaling 182,739 futures and options contracts on the Comex as of February 22, up fourteen percent from a week earlier, US Commodity Futures Trading Commission data showed. Holdings rose for a third straight week and are the highest since December 7, the day gold futures reached a record $1,432.50 an ounce.
Egypt banned the export of gold until June 30, Al Arabiya television reported yesterday, without saying where it obtained the information. From 2009, Egypt became a net supplier of gold to the international market, exporting mainly locally-refined scrap to Dubai and Europe, Pervan said in the report.
Cash silver increased 0.3 percent to $33.4966 an ounce. The metal climbed to $34.3187 on February 22, the highest price since 1980. Palladium rose 1.5 percent to $802.75 an ounce. The metal touched $862.25 an ounce on Feb 21, the highest level since 2001. Platinum for immediate delivery advanced 1.1 percent to $1,824.50 an ounce.
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