BLBG: Gold May Advance as Weaker Dollar Increases Investment Demand
By Nicholas Larkin and Luzi Ann Javier
Feb. 17 (Bloomberg) -- Gold, little changed in London today after reaching a two-week high, may gain for a third day as a weaker dollar fuels demand for an alternative investment.
The U.S. Dollar Index, a six-currency gauge of the greenback’s value, slipped to the lowest level in almost two weeks on speculation Greece won’t need a bailout. Gold typically moves inversely to the dollar. Billionaire George Soros more than doubled his stake in the world’s biggest gold-backed exchange-traded fund, a filing showed.
The metal “will again be looking to the euro for short- term direction,” analyst James Moore at TheBullionDesk.com in London said in a report. “Receding anxiety over Greece’s debt problems has boosted investor sentiment.”
Gold for immediate delivery added $1.73, or 0.2 percent, to $1,121.18 an ounce at 9:24 a.m. local time. The metal yesterday rose 1.7 percent. Bullion for April delivery was 0.1 percent higher at $1,121.30 on the New York Mercantile Exchange’s Comex unit.
The dollar gained the previous five weeks against the euro on concern sovereign debt problems would hamper Europe’s economic recovery. “There’s no actual need for a bailout,” Greek Finance Minister George Papaconstantinou said yesterday.
$663 Million Holding
Soros Fund Management LLC held 6.178 million shares in the SPDR Gold Trust as of Dec. 31, U.S. Securities and Exchange Commission data showed. That compares with 2.45 million shares three months earlier. The stake, valued at $663 million, is the fund’s biggest investment, the filing showed.
Total holdings in the trust increased 3.1 metric tons to 1,109.42 tons yesterday, the first gain since Feb. 5, according to figures on the company’s Web site.
Stronger investment and jewelry consumption fueled a 2.6 percent gain in global gold demand to 819.7 tons in the fourth quarter from the previous three months, the World Gold Council said in a report today. AngloGold Ashanti Ltd., the biggest African producer of the metal, today cited “talk of significant bar purchases by some of the larger buyers.”
“The 3-ton increase in SPDR holdings and steady coin and bar demand are a sign of further diversification from fiat currencies toward hard assets,” TheBullionDesk.com’s Moore said.
Silver for immediate delivery in London gained 0.5 percent to $16.22 an ounce. Palladium rose 1.2 percent to $438.25 an ounce and platinum added 0.7 percent to $1,550.20 an ounce.
To contact the reporters on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net; Nicholas Larkin in London at nlarkin1@bloomberg.net
