BS: Gold Gains in London as Weaker Dollar Spurs Investment Demand
By Nicholas Larkin and Kim Kyoungwha
Feb. 11 (Bloomberg) -- Gold gained in London as a declining dollar increased demand for the metal as an alternative investment.
The dollar fell as much as 0.5 percent against the euro as European Union officials prepared to meet in Brussels today to discuss ways of providing financial assistance to Greece. The dollar also declined against other currencies as reports in Australia and China signaled a stronger economic recovery. Gold typically moves inversely to the greenback.
“Gold will continue to track the euro-dollar,” James Moore, an analyst with TheBullionDesk.com in London, said in a report. “We expect dips to continue to draw investment interest” on sovereign debt concerns, while “the positive economic outlook in the Asian region has given gold a lift.”
Gold for immediate delivery added $7.80, or 0.7 percent, to $1,079.90 an ounce at 8:55 a.m. local time. Bullion for April delivery was 0.3 percent higher at $1,079.90 on the New York Mercantile Exchange’s Comex unit.
“As the dollar retreats somewhat, demand for gold is reviving,” said Jeon Yeong Min, a trader at Hyundai Futures Co. “The gains don’t look so convincing at the moment as Greece’s problems are heavy on the minds of market players.”
The dollar has climbed 4.1 percent against the euro this year on concern that fiscal gaps in Greece, Spain and Portugal may widen. Greece’s budget deficit will be discussed today at a meeting of European Union leaders. Prime Minister George Papandreou’s drive to bring Greece’s increasing budget under control was yesterday challenged in the streets as labor unions closed schools, hospitals and airports.
No Gold Collapse
Australia’s jobless rate unexpectedly fell last month amid the country’s biggest hiring boom in five years, while China’s statistics bureau said lending surged to 1.39 trillion yuan ($204 billion) in January and property prices climbed the most in 21 months.
“I won’t rule out that gold will go down to $950 or $1,000, but I don’t expect more downside,” investor Marc Faber, who publishes the Gloom, Boom and Doom report, said in an interview with Bloomberg Television in Hong Kong. “I don’t see any scenario where gold will collapse.”
The Fed may raise its discount rate “before long” as part of the “normalization” of lending, Chairman Ben S. Bernanke said yesterday in testimony for Congress. A change in the rate, currently at 0.5 percent, won’t signal an altered outlook for monetary policy, he said, repeating that low rates are warranted “for an extended period.”
Among metals for immediate delivery in London, silver rallied 1.4 percent to $15.4212 an ounce. Platinum added 0.3 percent to $1,515.50 an ounce, and palladium increased 0.3 percent to $414.75 an ounce.
--Editors: John Deane, Stuart Wallace.
To contact the reporters on this story: Kyoungwha Kim in Singapore at +65-6212-1895 or kkim19@bloomberg.net; Nicholas Larkin at +44-20-7673-2069 or nlarkin1@bloomberg.net.
To contact the editor responsible for this story: Stuart Wallace at +44-20-7673-2388 or swallace6@bloomberg.net.
