Nov. 11 (Bloomberg) — Gold gained in New York as European debt concerns spurred demand for a protection of wealth and as faster inflation in China boosted demand for commodities.

Gold futures climbed to a record $1,424.30 an ounce on Nov. 9 on concern that some European governments may struggle to raise funds. Portuguese and Spanish government bonds declined on mounting concern that nations on Europe’s periphery will be forced to restructure their debt. All six main industrial metals on the London Metal Exchange gained after China’s inflation reached a two-year high.

“The re-emergence of sovereign risk should ultimately help the yellow metal,” Edel Tully, an analyst at UBS AG in London, said in a report. “Rising inflation is one of the single biggest factors driving China’s appetite for gold.”

Gold futures for December delivery added $8.70, or 0.6 percent, to $1,408 an ounce at 8 a.m. on the Comex in New York. The metal for immediate delivery in London was 0.3 percent higher at $1,408.15. It reached a record $1,424.60 on Nov. 9.

Bullion rose to $1,413 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,390.50 at yesterday’s afternoon fixing. Bullion priced in euros and Swiss francs rose to the highest level since June, and reached the highest price since 1983 in Japanese yen.

Gold is up 28 percent this year and is heading for a 10th annual gain, the longest winning streak since at least 1920 in London, partly on demand for an alternative asset to protect against the debasement of currencies. Governments have spent trillions of dollars to bolster their economies. Last week, the Fed said it will buy an additional $600 billion of Treasuries through June.

Rising Inflation

Inflation in China, the largest consumer of raw materials from copper to soybeans, accelerated to the fastest pace in two years in October. Copper reached a record in London today. Some investors buy commodities to hedge against rising consumer prices.

“Some say there’s a bubble in gold prices or the metal is overbought, but the bull run does not seem to be receding,” said Lee Joon, a senior trader at Woori Futures Co. in Seoul. “Investors are rushing to risky assets like stocks and commodities with ample market liquidity.”

Gold assets in exchange-traded products fell 0.6 metric ton to 2,088.08 tons yesterday, according to data compiled by Bloomberg from 10 providers. Holdings reached a record 2,104.65 tons on Oct. 14. Silver assets climbed 354.4 tons to 14,741.7 tons yesterday, the most since at least February, data from four providers show.

Silver Gains

Rising silver holdings indicate “the scale of pent-up demand for precious metals as investors remain concerned about longer-term inflation,” James Moore, an analyst at TheBullionDesk.com in London, said in a report.

Silver for December delivery in New York added 1.8 percent to $27.35 an ounce. It reached $29.34 on Nov. 9, the highest price since March 1980, and is up 62 percent this year. Silver reached an all-time high of $50.35 in New York in 1980, a year after the Hunt brothers tried to corner the market.

Purchases of American Eagle silver coins from the U.S. Mint so far this month are 1.59 million ounces, data on its website show. That compares with 3.15 million ounces sold throughout October, the most since May.

Palladium for December delivery rose 2.9 percent to $717.20 an ounce and reached a nine-year high of $743.50 on Nov. 9. It’s up 75 percent this year. Platinum for January delivery gained 1.2 percent to $1,758.10 an ounce. Prices reached $1,811.80 on Nov. 9, the highest level since July 2008.

Both metals are used mostly to make jewelry and pollution- control devices for cars. Passenger-car sales in China, the world’s biggest auto market, rose at the fastest pace in six months in October as government incentives for fuel-efficient cars boosted buying.

–With assistance from Sungwoo Park in Seoul. Editors: John Deane, Dan Weeks.

To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net.

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.

Source: businessweek.com