By Nicholas Larkin and Glenys Sim Dec. 11 (Bloomberg) -- Gold gained for a third day in London, narrowing a second weekly drop, as a weaker dollar lured investors after the metal’s 7.2 percent slump from its all-time high. Bullion has declined this week as the dollar headed for a second weekly advance against the euro on concern about the soundness of some national credit ratings. The greenback slid today and European and Asian equities gained. Gold, which typically moves inversely to the U.S. currency, reached a record $1,226.56 an ounce on Dec. 3. Investors may “come out of safe-haven assets and into more risky assets, which is negative for the dollar and positive for gold,” said Peter Fertig, owner of Quantitative Commodity Research Ltd. in Hainburg, Germany. “At these levels, investors are going to buy again.” Gold for immediate delivery added $7.55, or 0.7 percent, to $1,138.55 an ounce at 9:54 a.m. local time. That reduced this week’s retreat to 2 percent. Bullion futures for February delivery on the New York Mercantile Exchange’s Comex unit were 1.2 percent higher at $1,139.40. The dollar, down 5.5 percent against the euro this year, slipped as much as 0.3 percent against the single European currency today. Spain, Greece Speculation that more European nations may see their credit ratings deteriorate has boosted the dollar this week, sending the currency toward its longest stretch of weekly gains in two months against the euro. Standard & Poor’s this week reduced its outlook for the debt ratings of Spain and Portugal, and Fitch Ratings lowered its ranking for Greece by one level. Gold will average $1,288 an ounce next year, above a prior estimate of $1,006, with “liquidity pushing prices higher,” JPMorgan Chase & Co. said in a report dated yesterday. Bullion for immediate delivery has averaged about $966 so far this year. “The dip buying we’ve been seeing will likely continue until the end of the year as gold looks to the dollar, the stock market and the general economic outlook for direction,” said Steven Zhu, head trader at Shanghai Tonglian Futures Co. Gold holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by the metal, were unchanged for a second day at 1,116.25 metric tons yesterday. They reached a record 1,134 tons on June 1. The metal may extend its decline next week as a rebounding dollar encourages sales and damps investor demand for an alternative investment, according to eleven of 22 traders, investors and analysts surveyed by Bloomberg. Nine forecast higher prices and two were neutral. Among other precious metals for immediate delivery in London, silver rose 0.7 percent to $17.52 an ounce. Platinum gained 0.8 percent to $1,436.25 an ounce, and palladium was little changed at $365 an ounce. Palladium held in ETF Securities Ltd.’s exchange-traded products rose 1.5 percent to a record 654,773 ounces yesterday, according to the company’s Web site. To contact the reporters on this story: Glenys Sim in Singapore at gsim4@bloomberg.net; Nicholas Larkin in London at nlarkin1@bloomberg.net

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