Gold, Platinum Rise to Records on Outlook for Inflation, Dollar

By Claudia Carpenter

Feb. 21 (Bloomberg) -- Gold and platinum rose to records in London, leading other precious metals higher, on speculation declines in the dollar and global demand for raw materials will spur demand for a hedge against inflation.

French inflation accelerated in January to the fastest pace in at least 12 years, led by higher food and energy costs, according to a government report today from Paris. Gold has risen 13 percent this year as the dollar dropped against the euro on speculation U.S. interest rates will decline.

``People buy gold for the inflation hedge,'' said Bernard Sin, chief trader at MKS Finance SA in Geneva. ``Investors are buying commodities in general as a hedge. That's why you see all the commodities going higher.''

Gold for immediate delivery advanced $1.38 to $945.48 an ounce as of 12:21 p.m. in London, after earlier reaching $948.59. Platinum rose as high as $2,192.50 an ounce, silver climbed to $18.045 an ounce, the highest since November 1980, and palladium reached $525.50 an ounce, the most since July 2001.

The UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials is up 14 percent this year, led by gains in sugar, lead, soybean oil and copper.

Gold for April delivery rose as much as $14.60, or 1.6 percent, to $952.40 an ounce on the Comex division of the New York Mercantile Exchange.

Consumer prices in France climbed by an annual 3.2 percent in January, up from 2.8 percent in December, the country's national statistics bureau said today.

Gold's gain this year has lagged platinum's 42 percent increase.

Gold Assets

Assets in the StreetTracks Gold Trust, the biggest fund backed by gold, are little changed this month while platinum demand in the ETFS Physical Platinum has jumped by almost two- thirds. While power cuts in South Africa have disrupted mining of both metals, the country in 2006 accounted for 12 percent of global gold supply and 69 percent of platinum production, according to London-based research company GFMS Ltd.

``People are jumping on the wagon to buy platinum because we are talking about a supply scare,'' Sin said. ``It has been supporting gold but not as much as platinum.''

Platinum for immediate delivery rose $30 to $2,170.50 an ounce as of 12:17 p.m. in London and silver gained 20 cents to $18.015 an ounce. Palladium was $30.75, or 6.2 percent, higher at $524 an ounce, the biggest jump since June 2006. In Tokyo, platinum for December delivery jumped the daily trading limit of 240 yen, or 3.5 percent, to close at 7,205 yen a gram ($2,076 an ounce) on the Tokyo Commodity Exchange.

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To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net or ccarpenter2@bloomberg.net

Last Updated: February 21, 2008 07:24 EST