Gold Trades Near Highest in a Week in London on Haven Buying
Wednesday, August 23rd 2006
Gold traded near a one-week high as investors sought haven investments on speculation Iran will today formally refuse to suspend its uranium-enrichment program.
Supreme leader Ayatollah Ali Khamenei said yesterday Iran “has made up its mind on the nuclear program,” the Iranian Student News Agency reported. President George W. Bush warned of “consequences” should it refuse to end the program. Some investors buy gold at times of political tension, betting the metal will hold its value better than stocks and other assets.
“If things with Iran worsen, it would trigger more bullion buying,” said Wolfgang Wrzesniok, head of marketing and sales at Heraeus Metallhandels GmbH in Hanau, Germany, which owns five gold refineries. “Gold shouldn’t back down much even if news were dovish.”
Gold for immediate delivery was little changed at $626.13 an ounce at 12:24 p.m. after earlier gaining as much as 0.3 percent, to $629.80. Gold futures for December delivery gained 20 cents, to $635 an ounce on the Comex division of the New York Mercantile Exchange.
The United Nations has given Iran until Aug. 31 to accept a European Union-led proposal of incentives, and suspend uranium enrichment, or face the prospect of economic sanctions.
Iran began a new round of enrichment June 6, the day the incentives were delivered in Tehran, the UN’s International Atomic Energy Agency said.
No Compliance
“No one expects Iran to comply with the Security Council, which can only ratchet up the geo-political pressures to push gold higher,” John Crowley, president of New York-based Lake Hill Partners Inc., which runs two hedge funds totaling about $100 million, said in an e-mail.
Gold also advanced on speculation the U.S. will pause interest rate increases on signs the economy is slowing.
U.S. producer and consumer price data last week signaled that the world’s largest economy is cooling, spurring speculation the Federal Reserve may pause rate increases. Reports tomorrow may show that home sales fell to a two-year low in July, according to economists surveyed.
“People are not expecting the Fed to hike rates and that means firm support for gold,” said Mikhail Shipitsin, equity sales trader at Alfa Bank in Moscow.
The Fed didn’t raise interest rates at a policy meeting Aug. 8 for the first time in more than two years, saying “economic growth has moderated.”
Platinum gained $2 to $1,234.50 an ounce and palladium fell to $343. Silver declined 19 cents to $12.20 an ounce.
Source: www.bloomberg.com
