Gold Futures Rise on Demand for Store of Value; Silver Advances

Feb. 4 (Bloomberg) -- Gold rose for the first time in three days on demand for the precious metal as a store of value amid global financial turmoil. Silver also gained.

UBS AG said today gold will average $1,000 an ounce this year, up 43 percent from its October forecast. Investment in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, rose to a record 853.4 metric tons on Feb. 2.

“Worldwide, gold is seen as a safe place to be,” said Frank Lesh, a trader at FuturePath Trading LLC in Chicago. “It’s one of the few assets that made money last year. Everybody wonders: Where should I go with my money this year? When you look around, gold is one of the few recipients.”

Gold futures for April delivery rose $9.70, or 1.1 percent, to $902.20 an ounce on the Comex division of the New York Mercantile Exchange. The price dropped 3.9 percent in the previous two days.

Rising government debt needed to rescue banks will devalue all currencies and lead to inflation, UBS said.

Demand for gold coins has picked up in the past two weeks in Europe, the bank said. London-based researcher GFMS Ltd. expects demand for gold bars to climb 49 percent to 201 tons in the first half.

“We believe that higher gold prices will lift silver and platinum in sympathy,” John Reade of UBS said.

Silver will average $14.75 in 2009, up from a forecast of $8.40, and platinum will average $1,050, up from $900, UBS said.

Silver futures for March delivery gained 17 cents, or 1.4 percent, to $12.47 an ounce. The metal slumped 24 percent in 2008, while gold gained 5.5 percent.

Platinum futures for April delivery rose $6.20, or 0.6 percent, to $969.70 an ounce on the Nymex. The metal gained 5.3 percent in January after falling 38 percent last year.

Palladium futures for March delivery gained $5.05, or 2.6 percent, to $198 an ounce. The metal rose 2.4 percent last month after plunging 50 percent in 2008.