Gold, Silver Climb in N.Y. as IMF Forecasts Recession to Deepen

April 22 (Bloomberg) -- Gold and silver advanced on rising demand for a store of value after the International Monetary Fund projected the global economy to contract this year.

The IMF forecast a 1.3 percent decline in the world economy, compared with a 0.5 percent expansion estimated in January, and said growth will be slower next year than previously expected. Some investors buy precious metals as a safe harbor in times of economic turmoil.

“What is supporting gold is the continued uncertainty in the global economy,” John Gross, the president of J-E Gross & Co., a metals-industry consulting company in Cranston, Rhode Island, said in an e-mailed comment. “We are in the midst of a ‘sea change’ where gold is the safe haven for investors.”

Gold futures for June delivery gained $9.80, or 1.1 percent, to $892.50 an ounce on the New York Mercantile Exchange’s Comex division and was headed for a weekly gain. Last week, the most-active contract slid 1.7 percent, the fourth- straight drop and the longest losing stretch since August.

Silver futures for May delivery jumped 24.5 cents, or 2 percent, to $12.305 an ounce on Comex. The price has tumbled 31 percent in the past year, while gold is down 3.5 percent.

The IMF projected growth of 1.9 percent next year, down from 3 percent estimated in January.

‘Difficulty’ at $890

“Gold continues to have difficulty getting above $890 an ounce, but is still trying,” Miguel Perez-Santalla, a sales vice president at Heraeus Precious Metals Management in New York, said in an e-mailed note. “Any negative economic news may give it the push needed,” he said. “Silver remains lackluster as there continues to be concerns whether the market is trying to jump the gun or if the recovery has begun or not.”

In the 16-nation euro region, there’s “significantly less risk of deflation” than in the U.S, the IMF said in the report.

“The market is divided between those who see inflation, due to the massive infusion of liquidity into the financial system, versus those who expect a deflationary environment going forward,” said Gross, who has traded metals for more than three decades. He is also publisher of the Copper Journal.

“I believe the market is in a consolidation phase, where it has been moving sideways over the past two weeks between $900 (resistance) and $865 (support),” Gross said. “If the $865 level fails to hold, the next level of support is $825. Conversely, if gold can get past $900 resistance, it may challenge the double top at $1,000.”