Palm | Kelapa Sawit

Gold and silver extended their advance as faster-than-forecast inflation in China and a resurgence of Europe’s sovereign-debt crisis increased demand for precious metals as a store of value.

Immediate-delivery gold gained as much as 0.5 percent to $1,523.82 per ounce, climbing for a fourth day after last week’s 4.4 percent slump, and traded at $1,522.95 at 11:05 a.m. in Singapore. Silver futures, which shed 27 percent last week, increased as much as 1.9 percent to $39.20 an ounce.

China’s consumer prices rose 5.3 percent in April from a year earlier, data showed today, exceeding the government’s full-year target for a fourth month. The gain was more than the 5.2 percent median forecast in a Bloomberg survey of 30 economists and compared with a 5.4 percent increase in March.

“Higher-than-expected inflation readings out of China might even result in some medium-term support for precious metals,” Marc Ground, an analyst at Standard Bank Plc, wrote in a note before the figure was released at 10 a.m. in Beijing.

The government aims for full-year inflation of 4 percent as Premier Wen Jiabao eyes the risk that rising prices for basic goods and housing will fan social discontent. Inflation is “the most pressing problem” facing China, Vice Premier Wang Qishan said at talks in Washington this week.

“Signs of continued pressures might see the market’s preoccupation with rising global inflation resurface, and consequently see some inflation-hedge demand,” wrote Ground.

Weaker Dollar

Gold, which reached a record $1,577.57 an ounce on May 2, may climb to $2,000 by January, according to Deutsche Bank AG. Investors including George Soros invested in gold as the metal surged over the past year on Europe’s sovereign-debt crisis, a weakening dollar and quickening inflation.

Standard & Poor’s this week downgraded Greece’s credit rating for the fourth time since April 2010, signaling that the region’s debt crisis is escalating. Demand for precious metals also grew as the dollar declined 0.4 percent this week against six major currencies, halting a 2.6 percent advance last week.

“With the resurfacing of euro-zone sovereign-debt concerns, we expect to see continued appetite for gold and silver,” Ground wrote. “Given the recent selloff, expect to see a return of investor as well as physical buying in search of value.”

UBS AG said its so-called physical gold sales yesterday were the second-highest this year, with above-average demand from India, the largest gold consumer. India’s inflation index rose 8.98 percent in March from a year ago, data showed on April 15, exceeding the central bank’s 8 percent estimate.

“Without necessarily expecting this very high pace of buying to continue, we nonetheless would look for Indian demand to continue at above-average levels, given how willing these buyers have lately been at prices in excess of $1,500,” UBS analyst Edel Tully wrote in an e-mailed report yesterday.

Immediate-delivery palladium increased 0.7 percent to $735.25 an ounce, while platinum gained 0.2 percent to $1,801.25. Spot silver gained as much as 1.8 percent to $39.2075 per ounce, and traded at $39.1475