Gold Poised for Eighth Straight Annual Gain on Investor Demand

Dec. 31 (Bloomberg) -- Gold was poised for its eighth straight annual gain and may continue to rise in 2009 on speculation geopolitical tensions and a weaker dollar will boost demand for the metal as a haven.

Bullion has gained 4.2 percent this year and reached a record $1,032.70 an ounce in March. The metal’s 13 percent rally this month has stalled as Israel weighs a French proposal for a 48-hour cease-fire in its five-day assault on the Gaza Strip. The dollar fell for a second day against the euro.

“Gold remains the best performing metal for 2008,” Jonathan Barratt, managing director of Commodity Broking Services in Sydney, said in an e-mail note today. “All roads point to gold continuing its ascent in 2009.”

Gold for immediate delivery was 0.6 percent lower at $868.83 an ounce at 11:10 a.m. in Singapore after losing 0.8 percent yesterday. It reached $890.49 on Dec. 29, the most since Oct. 10.

February-delivery gold was barely changed at $869.90 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.

“Investment awareness via exchange traded commodities, or ETC, and exchange traded funds, or ETF, will remain strong,” Barratt said. “Geopolitical concerns are keeping it bid and a weaker U.S. dollar is also keeping it bid.”

As many as 369 Palestinians have been killed and 1,400 wounded since Israel started its aerial campaign, according to the Palestinian emergency services office in Gaza City. Three Israeli civilians and one soldier have died in the rocket attacks that Israeli leaders say the offensive is designed to stop. A six-month cease-fire with Hamas expired Dec. 19.

ETF Soars

Investment in the SPDR Gold Trust, the largest exchange- traded fund of gold, has climbed 24 percent this year to a record 780.2 metric tons on Dec. 29. The fund has overtaken Japan as the world’s seventh-largest gold holding.

Silver for immediate delivery fell 0.3 percent to $10.93 an ounce. The metal is down 25.7 percent this year, the first annual decline in eight years and the largest since 1984.

Immediate-delivery platinum declined 0.2 percent to $915 an ounce, having reached $935 on Dec. 29, the highest since Oct. 16. The metal lost 40 percent this year, snapping the previous six yearly gains, as global car sales slumped.

Platinum, which reached an all-time high of $2,301.50 in March, is used in pollution-control devices in cars and trucks.

Crude Oil Trades Near $39, Heading for Record Annual Decline

Dec. 31 (Bloomberg) -- Crude oil was little changed in New York near $39 a barrel, heading for a record annual drop, on speculation that U.S. fuel stockpiles are increasing as the recession cuts demand.

U.S. gasoline supplies probably rose last week to the highest since August, according to a Bloomberg News survey conducted before an Energy Department report due later today. Confidence among U.S. consumers sank to the lowest level in at least 41 years as Americans grew concerned about keeping their jobs, the New York-based Conference Board said.

“The indicators are still weak; they’re not really painting a picture of any improvement,” said Toby Hassall, a research analyst at Commodity Warrants Australia Pty in Sydney. “The timing and magnitude of any recovery next year is still very uncertain.”

Crude oil for February delivery was at $38.89 a barrel, down 14 cents, in after-hours electronic trading on the New York Mercantile Exchange at 10:23 a.m. Singapore time. Yesterday the contract fell 99 cents, or 2.5 percent, to $39.03. Prices are down 59 percent this year, the first annual drop since 2001 when oil fell 26 percent, and the biggest decline since trading began in 1983.

Oil may rebound next year to average $60 a barrel as the Organization of Petroleum Exporting Countries makes record production cuts to counter the deepest economic slump since World War II, according to the median forecasts of 33 analysts compiled by Bloomberg. That would be a 54 percent gain from today’s price.

U.S. Stockpiles

Brent crude for February settlement was at $40.09 a barrel, down 6 cents, on London’s ICE Futures Europe exchange at 10:11 a.m. Singapore time.

U.S. gasoline stockpiles probably rose 1.7 million barrels in the week ended Dec. 26, from 207.3 million barrels the week before, according to the median of 13 analyst estimates.

Supplies of distillate fuel, a category that includes heating oil and diesel, probably increased 1.5 million barrels. Crude-oil inventories probably dropped 1.45 million barrels last week, the survey showed.

The Energy Department is scheduled to issue its weekly report at 10:35 a.m. in Washington today.

“The one ray of hope is that we are coming into one of the traditional peak periods as far as demand is concerned,” said Gavin Wendt, senior resources analyst at Fat Prophets Funds Management. “We could get some cold temperatures in the Northern Hemisphere which might provide some upward impetus for the oil price.”

Gaza Strip

A storm may dump 6 inches of snow on Boston tomorrow, while revelers in New York City’s Times Square will have a frigid New Year’s Eve, forecasters say. A second storm will hit the U.S. Northeast Jan. 2, though it is too early to tell what that system will bring to the region, said Bill Simpson, a meteorologist with the National Weather Service in Taunton, Massachusetts.

Oil rose more than 6 percent in each of the two trading days through Dec. 29 on concern that supplies from the Middle East may be disrupted amid a conflict between Israel and Hamas in the Gaza Strip. In the deepest strike yet into Israeli territory, a rocket last night hit the city of Beersheba, 40 kilometers (24 miles) from Gaza.

“The dominant theme in the oil market remains that weak demand outlook which is overshadowing the current geopolitical issues in the Middle East,” Commodity Warrants’ Hassall said.