Bloomberg Gold Rises to Highest Price Since December on Investor Demand

April 30 (Bloomberg) -- Gold climbed to the highest price since December on signals that sovereign-debt risk may erode the value of currencies, boosting demand for the precious metal as an alternative asset.

Holdings in the SPDR Gold Trust, the biggest investment fund that buys bullion, jumped the most in a year. The dollar headed for a monthly gain against the euro as European policy makers neared an agreement to rescue Greece.

“This is a powerful move for gold,” said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. “There’s significant concern over sovereign debt. While the dollar is the least odious of the paper currencies, gold is going to outperform all currencies.”

Gold futures for June delivery advanced $11.90, or 1 percent, to $1,180.70 an ounce on the Comex in New York, after reaching $1,182.50, the highest level since Dec. 4. The record was $1,227.50 on Dec. 3.

The metal rose 5.9 percent in April, the biggest monthly jump since November, after credit ratings in Greece, Portugal and Spain were downgraded by Standard & Poor’s. Gold climbed to records in euros, Swiss francs and sterling this week.

“It is very much the safe-haven appeal of gold that is boosting prices,” said Suki Cooper, an analyst at Barclays Capital in London, who predicts gold will climb to a record in the third quarter.

Crisis May Spread

Prices may accelerate if sovereign-debt worries spread to the U.S., analysts said.

“For the time being, attention remains focused on Europe,” analysts at Deutsche Bank AG said in a report. “An escalation in U.S. sovereign risk would trigger a foreign- exchange adjustment in the U.S. dollar, which we would view as bullish for the gold price.” more...