Gold Jumps to Highest in Three Months on Risk of Attack on Iran

By Millie Munshi

July 14 (Bloomberg) -- Gold rose to the highest in more than three months on heightened speculation that the U.S. or Israel is preparing to attack Iran, boosting demand for the metal as a haven. Silver also gained.

Israeli warplanes held maneuvers over Iraq, possibly preparing for a strike against Iran, the Jerusalem Post reported on July 11. Israel denied the report. Gold jumped 2.9 percent last week after Iran tested missiles, including one with the range to reach Israel. The U.S. has led unsuccessful international efforts to get Iran to end its nuclear program.

``Rumors of Israel attacking Iran is not a good or stable situation, and that's going to help gold prices,'' said Matthew Zeman, a trader at LaSalle Futures Group in Chicago. ``People are turning to gold now as a safe-haven buy.''

Gold futures for August delivery gained $13.10, or 1.4 percent, to $973.70 an ounce on the Comex division of the New York Mercantile Exchange, the highest since March 19. The metal reached a record $1,033.90 on March 17.

The price climbed 4 percent in the previous three sessions. The metal has risen 16 percent this year.

``Gold has reasserted safe-haven status,'' Citigroup Inc. analyst John Hill said in a report today. ``We continue to be positive on gold.''

Gold will average $905 an ounce this year and gain to an average $950 an ounce in 2009, Citigroup estimates.

``Longer term, we would not be surprised to see gold double from current levels'' as traders buy the metal as an alternative asset, Hill said. Investment ``remains dominant,'' he said.

Gold extended gains today as the dollar fell against a basket of six major currencies after rising earlier.

`Key Drivers'

``The dollar has been one of the key drivers'' for gold and other metals, said Ron Goodis, a futures-trading director at Equidex Brokerage Group Inc. in Closter, New Jersey.

Gold may rise for a fifth straight week, partly on speculation that surging energy costs will spark demand. Eighteen of 25 traders, investors and analysts surveyed from Mumbai to Chicago on July 10 and July 11 advised buying gold. Five said to sell, and two were neutral.

Most-active crude-oil futures, which touched a record $147.27 a barrel on July 11, fell 47 cents, or 0.3 percent, to $144.61 in New York trading. Oil has almost doubled in the past year.

Silver futures for September delivery rose 43 cents, or 2.3 percent, to $19.25 an ounce. The metal has gained 29 percent this year.

To contact the reporter on the story: Millie Munshi in New York at

Last Updated: July 14, 2008 14:26 EDT

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