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Oct. 10 (Bloomberg) -- Gold may extend its longest rally of the year, topping the highest prices since 1988, as investors stock up on bullion as a hedge against accelerating inflation, a Bloomberg survey showed.
Twenty-nine of the 47 traders, analysts and investors surveyed on Oct. 6 and Oct. 7 from Sydney to New York recommended investors buy gold, which jumped $5.40 last week to $477.70 an ounce on the Comex division of the New York Mercantile Exchange. Gold has risen 8.1 percent during the past six weeks as energy prices reached record highs.
``We're going to see elevated inflation trends over the short term,'' said Mihir Worah, senior vice president at Newport Beach, California-based Pacific Investment Management Co., the world's biggest bond fund, which also has about $500 million in gold out of $10 billion invested in commodities. ``A lot of the hedge funds are selling crude oil and getting into gold.''
The current gold rally is the longest since a seven-week stretch that ended Dec. 17. Praxair Inc., based in Danbury, Connecticut, raised prices on industrial gases by about 15 percent on Oct. 5, two days after BASF AG announced plans to boost prices for all its chemical products in North America to recover higher raw-material and energy costs.
Gold futures for December delivery rose 1.1 percent in New York last week. The gain was expected by a majority of analysts surveyed Sept. 29 and Sept. 30. A rise in the spot price of gold to over $476, exceeding the 17-year high of $475.45 on Sept. 22, may push gold to $495 this week, said Frank McGhee, head gold trader at Chicago-based Alliance Financial LLC.
High Energy Prices
Bloomberg's survey has correctly forecast gold's direction in 43 of 76 weeks, or 57 percent of the time. Eight of the respondents in the recent survey said prices would fall and 10 were neutral. A futures contract is an obligation to buy or sell a commodity at a set price by a specific date.
Record-high prices for oil, gasoline and natural gas in the past month boosted costs for manufacturers and consumers. Investors sometimes buy gold as an alternative during periods of rapid inflation, which erodes the value of stocks and bonds.
Barclays Capital on Oct. 5 raised its gold price forecast, to $460 for the fourth quarter from $415, saying ``the inflation scare in the air will continue to provide support for gold at historically high price levels.''
Gold priced in euros is up 7.9 percent in the past month, 9.4 percent in yen and 6.7 percent in Indian rupees.
``Gold has been appreciating against most if not all major currencies over the past several weeks, which signals worldwide inflation,'' said Alliance Financial's McGhee. Alliance trades about $250 million of gold annually. ``Gold will continue to march higher over the next several weeks, if not months.''
Twenty-nine of the 47 traders, analysts and investors surveyed on Oct. 6 and Oct. 7 from Sydney to New York recommended investors buy gold, which jumped $5.40 last week to $477.70 an ounce on the Comex division of the New York Mercantile Exchange. Gold has risen 8.1 percent during the past six weeks as energy prices reached record highs.
``We're going to see elevated inflation trends over the short term,'' said Mihir Worah, senior vice president at Newport Beach, California-based Pacific Investment Management Co., the world's biggest bond fund, which also has about $500 million in gold out of $10 billion invested in commodities. ``A lot of the hedge funds are selling crude oil and getting into gold.''
The current gold rally is the longest since a seven-week stretch that ended Dec. 17. Praxair Inc., based in Danbury, Connecticut, raised prices on industrial gases by about 15 percent on Oct. 5, two days after BASF AG announced plans to boost prices for all its chemical products in North America to recover higher raw-material and energy costs.
Gold futures for December delivery rose 1.1 percent in New York last week. The gain was expected by a majority of analysts surveyed Sept. 29 and Sept. 30. A rise in the spot price of gold to over $476, exceeding the 17-year high of $475.45 on Sept. 22, may push gold to $495 this week, said Frank McGhee, head gold trader at Chicago-based Alliance Financial LLC.
High Energy Prices
Bloomberg's survey has correctly forecast gold's direction in 43 of 76 weeks, or 57 percent of the time. Eight of the respondents in the recent survey said prices would fall and 10 were neutral. A futures contract is an obligation to buy or sell a commodity at a set price by a specific date.
Record-high prices for oil, gasoline and natural gas in the past month boosted costs for manufacturers and consumers. Investors sometimes buy gold as an alternative during periods of rapid inflation, which erodes the value of stocks and bonds.
Barclays Capital on Oct. 5 raised its gold price forecast, to $460 for the fourth quarter from $415, saying ``the inflation scare in the air will continue to provide support for gold at historically high price levels.''
Gold priced in euros is up 7.9 percent in the past month, 9.4 percent in yen and 6.7 percent in Indian rupees.
``Gold has been appreciating against most if not all major currencies over the past several weeks, which signals worldwide inflation,'' said Alliance Financial's McGhee. Alliance trades about $250 million of gold annually. ``Gold will continue to march higher over the next several weeks, if not months.''