Gold poised for biggest monthly advance since April on demand

Gold is set for the biggest monthly advance since April as signs that the global economic recovery may be faltering prompt investors to boost their holdings to try to preserve their wealth.

Gold for immediate delivery was little changed at $1,236.20 an ounce at 12:56 pm in Singapore, climbing 4.7 per cent this month. The metal, which reached a record $1,265.30 an ounce in June, climbed 5.9 per cent in April. The December contract in New York was also little changed today at $1,238.50 an ounce.

“Driven by stronger investor interest, gold prices have made significant gains lately,” Eugen Weinberg, head of commodity research at Commerzbank AG, wrote in a report. “As long as weak economic data releases continue, investor interest should remain high.”

US data yesterday showed that personal incomes climbed 0.2 per cent in July, less than projected, reinforcing concern that the world’s largest economy may be slowing. Asian stocks are poised for a monthly decline on concern that Europe’s sovereign-debt crisis and China’s steps to curb property prices will also slow global growth.

Analysts have raised 2011 forecasts for gold more than for any other precious metal in the past two months, predicting a 10th annual gain, data compiled by Bloomberg show. Gold may rise as high as $1,500 next year, according to the median estimate in a Bloomberg survey of 29 analysts, traders and investors.

Holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, were unchanged at 1,298.56 metric tonnes yesterday, according to figures on the company’s website. Holdings touched a record of 1,320.44 tonnes in June.

Traders are awaiting today’s release by the Federal Reserve of the minutes of the US central bank’s August 10 meeting for hints on where the economy is headed, said Ong Yi Ling, a Singapore-based investment analyst at Phillip Futures Pte.

The Fed’s minutes may “show increased concerns over the strength of the economic recovery and lowered growth forecasts for 2010,” Ong said. “This could provide a slight boost for gold prices.”

Fed Chairman Ben S Bernanke said last week that the US central bank “will do all that it can” to ensure the economic recovery continues and that further securities purchases may be warranted if growth slows.

Silver for immediate delivery dropped 0.2 per cent to $18.9725 an ounce, platinum fell 0.4 per cent to $1,521.50 an ounce and palladium dropped 0.7 per cent to $493.50 an ounce.