Gold Breaks $1,300 for First Time since August

Gold exceeded $1,300 an ounce for the first time since August on speculation slowing global growth will prompt central banks to boost stimulus, spurring haven demand.

Investors are adding to gold-backed funds at the fastest pace in three years. Open interest in New York futures and options is at the highest in eight weeks, and money managers are the most bullish since August. Silver also climbed on Wednesday in London in its best start to a year in three decades.

After shunning gold for two years, investors are returning to the metal amid concern U.S. growth won’t be enough to offset weakness in foreign economies. Policy makers in Europe and Asia are being challenged to come up with new ways to spur growth amid prolonged below-target inflation. Bullion rose 70 percent from December 2008 to June 2011 as the Federal Reserve pumped more than $2 trillion into the financial system.

“Capital is flowing into safe assets such as gold,” said Mark To, head of research at Wing Fung Financial Group, a trader and refiner in Hong Kong. “The market is currently full of news that’s supportive of higher gold prices — expectations for lower global growth, uncertainty around what the ECB will do and more stimulus around the world.”

Bullion for immediate delivery climbed as much as 0.6 percent to $1,303.63 an ounce and traded at $1,299.83 by 12:29 p.m. in London, according to Bloomberg generic pricing. Futures for February delivery on the Comex in New York gained 0.4 percent to $1,299.70.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza