BLBG: Gold Gains for First Day in Four in London as Dollar Weakens
By Nicholas Larkin and Kim Kyoungwha
Dec. 8 (Bloomberg) -- Gold gained for the first time in four days in London as a weaker dollar increased the metal’s appeal as an alternative investment.
The dollar slid as much as 0.3 percent against the euro after yesterday climbing to a one-month high. Gold typically moves inversely to the greenback and has added 31 percent this year as the Federal Reserve has held interest rates near zero, contributing to the dollar’s 5.9 percent drop. Central banks in India and other countries have added to bullion stockpiles.
“Traders continue to track the dollar,” James Moore, an analyst at TheBullionDesk.com in London, said today in a report. “Expectations of record low U.S. interest rates will likely limit substantial weakness in gold.”
Gold for immediate delivery added as much as $10.93, or 0.9 percent, to $1,169.03 an ounce and was at $1,161.30 at 9:53 a.m. local time. Bullion futures for February delivery on the New York Mercantile Exchange’s Comex unit were 0.1 percent lower at $1,162.30.
Bullion touched a record $1,226.56 an ounce on Dec. 3. Prices have rallied as central banks including Russia and Sri Lanka added more of the metal to reserves, and funds and individuals boosted purchases to protect their wealth against the weaker dollar and on expectations of inflation gains.
“I expect to see a rally into the year-end again to test up to the $1,200 area,” said Chad Walls, head of precious- metals trading at Fortis Bank in Hong Kong.
Gold ‘Illusion’
Further gold holdings are unattractive because the metal offers no cash returns, according to the Bank of Korea, which is diversifying foreign-exchange reserves away from a falling dollar. Most other central banks aren’t buying and the metal is too volatile, it said.
“There’s an illusion in gold,” Lee Eung Baek, head of the bank’s reserve-management department, said in an interview. “We follow the big trend. Gold isn’t the trend. Out of more than 200 nations, how many countries have bought bullion?”
Among other metals for immediate delivery in London, silver added 0.4 percent to $18.25 an ounce. Palladium rose 1.6 percent to $379.25 an ounce, and platinum gained 1 percent to $1,455.25 an ounce.
To contact the reporters on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net; Nicholas Larkin in London at nlarkin1@bloomberg.net
