Gold Gains as Euro Drop Drives Demand for Currency Alternatives

April 6 (Bloomberg) -- Gold climbed to a one-month high, erasing a decline, as Greek debt concerns spurred investors to buy precious metals as an alternative to holding currency. Platinum touched a 20-month high before giving up the gain.

Gold priced in euros is up 11 percent this year, reaching a record today as the 16-nation currency dropped against the dollar on concern the European Union’s financial-rescue plan for Greece may fail. Greek 10-year bond yields climbed above 7 percent for the first time since January.

“What’s happening overseas is helping gold right now,” said Marty McNeill, a trader at R.F. Lafferty Inc. in New York. “People will go to gold as a safe haven. Gold priced in euros has gained much more than gold on a U.S. dollar basis.”

Gold futures for June delivery rose $2.20, or 0.2 percent, to $1,136 an ounce on the Comex in New York. Earlier, the most- active contract climbed to $1,139.60, the highest price since March 5.

Bullion futures rallied 24 percent last year, touching a record $1,227.50 on Dec. 3, as U.S. interest rates held near zero sent the dollar down 4.2 percent against a basket of six major currencies. The dollar has gained 4.7 percent this year while gold is up 3.6 percent.

“The dollar is the least-bad currency,” said Mark O’Byrne, the executive director of Goldcore Ltd. in Dublin. “The demand for gold has to with demand for a safe haven and an inflation hedge.”

The Reuters/Jefferies CRB Index of 19 commodities touched a 10-week high before erasing gains.

Global Recovery

“It appears the global recovery is on,” said Kevin Davitt, a senior market analyst at LaSalle Futures Group in Chicago. “You’re seeing considerable interest in commodities across the board. The question now is when does inflation become a concern.”

Platinum futures for July delivery fell $5.30, or 0.3 percent, to $1,704.50 an ounce on the New York Mercantile Exchange. Earlier, the metal touched $1,713.20, the highest price for a most-active contract since Aug. 1, 2008.

Silver futures for May delivery slipped 18.7 cents, or 1 percent, to $17.931 an ounce on the Comex. The metal gained 4.5 percent in the previous three sessions.

June palladium futures advanced 50 cents, or 0.1 percent, to $508.50 an ounce on the Nymex. Before today, the metal surged 8 percent since March 30, touching a two-year high of $511.75 yesterday.