Gold Climbs to Record, Silver Rallies as Investors Flee Weakening Dollar

Gold advanced to a record, set for the best run since November 2006 after rising for nine days, as investors sought to protect their wealth against a weaker dollar, faster inflation and geopolitical tension in the Middle East. Silver climbed to a 31-year high.

Bullion for immediate delivery rose as much as 0.5 percent to $1,514.72 per ounce and traded at $1,511.65 at 10:39 a.m. in Singapore. The June-delivery contract in New York advanced as much as 0.7 percent to $1,514.50 per ounce, also a record.

“We do look at quite quick appreciation of gold in the coming months and it’s really driven by dollar weakness,” Dominic Schnider, director for wealth management research at UBS AG, said in a Bloomberg Television interview today.

Gold has climbed 5.6 percent this month as the dollar fell 2.2 percent against a six-currency basket. The dollar dropped near a 16-month low against the euro on speculation that the Federal Reserve will keep borrowing costs near zero while European Central Bank officials signal further rate increases.

Consumer prices are accelerating from China to India as oil surged to a two-and-a-half year high after violence in the Middle East and Africa threatened to disrupt supplies. Assets in gold-backed exchange-traded products expanded 2.1 percent this month, reaching 2,069.87 metric tons on April 22, according to data compiled by Bloomberg from 10 providers.

Silver Climbs

Silver gained as much as 1.4 percent to $47.8925 an ounce, the highest price since March 1980. It’s also up for a ninth day, the longest winning run since an 11-day increase in March 2008.

The ratio of gold to silver dropped to the lowest level since October 1980 as investors sought a store of value in the metal that may also benefit from economic growth. One ounce of gold bought as few as 31.5777 ounces of silver today.

“Silver in the long run really will end up in a bloodbath, but in the short term the market loves it,” said Schnider. “As long as the economy is doing well, you’re going to see higher prices and dollar weakness.”

Platinum gained for a fourth day, by as much as 0.5 percent to $1,831.50 per ounce, the highest price since March 7, and palladium rose as much as 0.9 percent to $774.50 an ounce.

To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

http://www.bloomberg.com/news/2011-04-25/gold-climbs-to-record-silver-rallies-as-investors-flee-weakening-dollar.html