Friday, August 20, 2010

Gold Rises to Seven-Week High as U.S. Unemployment Spurs Demand for Haven

Gold futures rose to a seven-week high after a U.S. report showed an unexpected jump in initial jobless claims, adding to concern that the economy is slowing and boosting demand for bullion as a haven.

Claims rose by 12,000 to 500,000 in the week ended Aug. 14, the Labor Department said today. That exceeded all estimates of economists surveyed by Bloomberg News. Before today, gold climbed 12 percent this year, outperforming equities, on signs that global growth may be losing momentum.

“There’s tremendous uncertainty and the recovery is spotty,” Caesar Bryan, who manages $609 million in the GAMCO Gold Fund Inc., said today in a Bloomberg Television interview in New York. Gold “is in a multiyear bull market. Prices are going to go up.”

Gold futures for December delivery rose $4.60, or 0.4 percent, to $1,236 an ounce at 9:50 a.m. on the Comex in New York, after touching $1,236.80, the highest price for a most- active contract since July 1.

“Concerns about a slowing economy in the second half still prevail, supporting the safe-haven asset,” Lee Suk Jin, a commodities analyst with Seoul-based Tong Yang Securities Inc., wrote in a report today. “In the short term, gold may continue to be propped up by demand from investors trying to avoid risky assets due to uncertainties in the markets.”

Before today, gold futures gained 5.9 percent in the previous three weeks as concern deepened that the global recovery may falter.