American Bullion -- Gold Climbs in New York on Alternative Investment to Currencies

Tuesday, March 02, 2010 at 12:00pm

March 02, 2010, 12:01 PM EST | By Nicholas Larkin

March 2 (Bloomberg) -- Gold rose to the highest price in almost six weeks in New York as concern about Greece’s debt increased demand for bullion as an alternative to holding currency.

The Greek government said it will announce new deficit cuts tomorrow. Greek government workers called a 24-hour strike on March 16 as Prime Minister George Papandreou prepares to meet German Chancellor Angela Merkel on March 5. European finance ministers the past few weeks put more pressure on Greece to rein in its budget deficit.

Gold is “security against any financial turmoil in any country,” said Wallace Ng, Hong Kong-based executive director of commodity derivatives at Fortis Nederland. “People are worried about national debt of the European countries, that’s why they sell euro and sell sterling. But if they are worried about the situation, they shouldn’t sell gold.”

Gold futures for April delivery added $16.60, or 1.5 percent, to $1,134.90 an ounce on the New York Mercantile Exchange’s Comex unit at 11:37 a.m. local time and earlier today gained to $1,135.40, the highest price since Jan. 20. Gold for immediate delivery in London was 1.4 percent higher at $1,134.53.

The metal increased to $1,126.50 an ounce in the afternoon “fixing” in London, used by some mining companies to sell production, from $1,116 at this morning’s fixing. Spot prices reached a record 836.63 euros today, while the metal climbed to an all-time high of 759.94 pounds.

The dollar has jumped 5.7 percent this year against the euro as concern about Greece’s ability to reduce its debt cut demand for assets denominated in the single European currency. The greenback was little changed today, paring earlier gains of as much as 0.9 percent. Gold futures reached a record $1,227.50 an ounce on Dec. 3 and are up 3.4 percent this year.

Austerity Plan

A spokesman for Greece’s government said the nation will await reaction to the cuts before selling any bonds. European Union Monetary Affairs Commissioner Olli Rehn yesterday said Greece must reveal new measures “in the coming days” to allay officials’ concerns that the current austerity plan falls short.

“Gold is holding up well in a strong-dollar environment, supported by sovereign-debt worries,” analysts including Filip Petersson at Swedish bank SEB AB’s commodity unit said in a report. “Continued high liquidity, low interest rates, sovereign-debt and exit-strategy uncertainties as well as longer-term dollar skepticism are all likely to fuel demand and limit downside risk for gold prices.”

Bullion climbed to a record in pounds as the currency fell against the dollar amid concern Britons may fail to elect a government with a large enough majority to cut the country’s deficit. Sterling-denominated gold prices have advanced 12 percent this year, while the slide in the euro has pushed euro- priced bullion up 9 percent.

Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by the metal, were unchanged for a fourth day yesterday at 1,106.99 metric tons, according to the company’s Web site.

Silver for May delivery in New York climbed as much as 2.6 percent to $16.895 an ounce, the highest price since Feb. 3, and was last at $16.865. Platinum for April delivery rose to a one- month high of $1,570.70 an ounce, and was last up 1.7 percent at $1,570.70. Palladium for June delivery added 1.4 percent to $444.15 an ounce.