Feb. 20 (Bloomberg) — Gold climbed to an 11-month high in London, edging nearer $1,000 an ounce, as falling equity markets and concern that the global economy is worsening lifted demand for the metal as a haven. Silver and platinum also gained.

Gold reached $997.49 an ounce today, the highest since March 18, as investors sought a store of value and bullion holdings in exchange-traded funds rose to records. Stocks in Europe and Asia retreated, sending the MSCI World Index lower for a ninth day.

“It’s the global crisis making investors go to safe-haven buying of gold,” Afshin Nabavi, a senior vice president at MKS Finance SA, one of Switzerland’s four bullion refiners, said by telephone from Geneva. “Gold is acting on its own and only as a safe haven for investors, ignoring all fundamentals.”

Gold for immediate delivery gained $21.25, or 2.2 percent, to $995.90 an ounce at 1:25 p.m. local time. April futures rose $20, or 2 percent, to $996.50 an ounce in electronic trading on the Comex division of the New York Mercantile Exchange.

The metal climbed to $981 in the morning “fixing” in London, used by some mining companies to sell production, from $980.50 at yesterday’s afternoon fixing. Spot prices, heading for a second weekly gain, are up 13 percent this year, compared with a 15 percent loss for the MSCI World Index. Bullion reached a record $1,032.70 in March.

Investors have increased gold holdings as central banks cut interest rates and boost spending to help revive economies. Gold in the SPDR Gold Trust, the largest exchange-traded fund backed by bullion, climbed to a record 1,028.98 metric tons yesterday, placing it just behind the 1,040 tons held by Switzerland, the world’s sixth-largest stockpile.

Maintaining Momentum

“Given the economic downturn and currency depreciation, $1,000 is an obvious target for gold,” London-based broker Marex Financial Ltd. said in a report. The metal “will be likely to keep its momentum in the coming week.”

The global credit crisis poses a “serious challenge” to the financial system and economic policy makers around the world, European Central Bank President Jean-Claude Trichet said today in a speech in Paris. The ECB will provide financial institutions with unlimited cash for as long as needed to help them through the crisis, he said.

Britain is threatened with a decade-long depression similar to that suffered by Japan in the 1990s, Bank of England Deputy Governor John Gieve said yesterday.

“People are worried about liquidity and safety issues,” said Standard Chartered Plc analyst Dan Smith. “They’re quite keen to go to gold. They understand what they’re investing in.”

Among other metals for immediate delivery in London, silver rose as much as 3.8 percent to $14.575 an ounce, the highest since Aug. 14. The metal last traded at $14.56.

Platinum gained $24.50, or 2.3 percent, to $1,093.50 an ounce, and palladium added 0.6 percent to $217.25 an ounce.

Gold, little changed today in London, may advance as investors buy the metal to diversify portfolios and preserve their wealth as the global economy sags.

The Group of Seven’s finance ministers said after talks in Rome yesterday that a ‘’severe” economic downturn will persist for most of 2009. Japan’s economy shrank at an annual 12.7% pace last quarter, the most since 1974.

Bullion for immediate delivery added $US2.20, or 0.2%, to $US943.90 an ounce. April futures climbed $US2.20 to $US944.40 in electronic trading on the Comex division of the New York Mercantile Exchange. The US market is closed today for a holiday.

”Gold’s ability to close last week above $US930 was encouraging,” James Moore, an analyst at TheBullionDesk.com, wrote today in a note. ”We expect gold to see further inflows” following ”renewed banking and economic jitters.”

The metal declined to $US942.50 in the afternoon ”fixing” in London, used by some mining companies to sell production, from $US943 at the morning fixing. Bullion gained 3.3% last week and is up 7% this year.

Gold may gain for a second straight week as the banking crisis and recession deepen, according to 26 of 32 traders, investors and analysts surveyed from Tokyo to Chicago last week. Five respondents advised selling and one was neutral.

UK contraction

The UK economy will shrink 3.3% this year, almost twice the pace previously forecast, as the country heads into the worst recession in almost 30 years, the nation’s biggest business lobby said today.

Assets in three of the industry’s largest exchange-traded funds are at all-time highs. ETF Securities Ltd’s Physical Gold fund rose to 2.299 million ounces on Feb. 13. The SPDR Gold Trust, the biggest ETF backed by the metal, expanded to 985.86 metric tons as of Feb. 13, while Zuercher Kantonalbank’s fund has record assets of 3.734 million ounces.

Gold reached a six-month high of $US952.92 in London on Feb. 12.

The metal may remain in a ”consolidation phase” today because of the US holiday and after last week’s gains, London- based broker Marex Financial Ltd. said in a report.

”Economic stimulus plans by governments around the world are likely to drive inflation, increasing demand for gold as a hedge,” Marex said. ”Governments may continue spending until they see inflation.”

Package approved

US Congress has given final approval to a $US787 billion economic stimulus package and Treasury Secretary Timothy Geithner last week pledged as much as $US2 trillion in financing for programs aimed at spurring new lending.

Hedge-fund managers and other large speculators increased their net-long position by 5% in New York gold futures in the week ended Feb. 10, according to US Commodity Futures Trading Commission data. Speculative long positions, or bets prices will rise, outnumbered short positions by 163,622 contracts on the Comex.

Bullion has climbed 31% since October as governments are lowering interest rates and spending trillions of dollars to combat the recession.

”One of the critical factors about gold is that it’s not issued by a central bank,” Charles Kernot, a mining analyst at Evolution Securities in London, said in a Bloomberg Television interview. As governments devalue their currencies, “you want to have a completely independent hedge against that happening and gold really is such an independent hedge. There is still plenty of scope for a further uplift in the metal’s price.”

Among other metals for immediate delivery in London, silver slipped 0.7% to $US13.59 an ounce. Platinum rose $US2.25 to $US1,066.50 an ounce, and palladium was 0.6% lower at $US215.25 an ounce.