Many of the reasons for owning gold remain intact, Morgan Stanley analysts including Peter Richardson wrote in a note yesterday, citing currency debasement and rising inflation expectations. The metal may have a sharp rally as investors seek so-called real assets, Elliott Management Corp., the hedge fund founded by Paul Singer, said in a document accompanying its fourth-quarter report to investors on Jan. 28.
Russia and Kazakhstan expanded their gold reserves for a fourth straight month in January, according to International Monetary Fund data. Central banks will again be strong buyers this year after boosting purchases 17% to 534.6 tons last year, the most since 1964, according to the World Gold Council.
Data from the U.S. showed that builders broke ground on the most single-family homes in more than four years last month, while a manufacturing index climbed to a nine-month high. The Dollar Index, a gauge against six counterparts, has risen 2.7% this year, reaching the highest level since August today. Gold tends to trade inversely to the currency.
In Europe, German business confidence rose to a 10-month high in February, adding to signs that Europe’s largest economy is improving.