Spot gold climbed, rebounding from the biggest monthly drop since 2009, on speculation that rising food and oil prices will increase the metal’s appeal as a hedge against inflation. Protests in Egypt also boosted haven demand. Bullion for immediate delivery advanced as much as 0.5 percent to $1,339.93 an ounce before trading at $1,337.30 at 2:21 p.m. in Seoul. The price slumped 6.2 percent in January, the biggest monthly drop since December 2009, amid improving prospects for the global economy. The April-delivery contract gained 0.3 percent to $1,338.10 an ounce in New York. “We are seeing inflation on the rise globally,” said Darren Heathcote, the head of trading at Investec Bank Australia) Ltd. in Sydney. “Gold has always been seen as an asset to protect against inflation. So, when we start talking about potential inflation, we do find quite often there’ll be some buying as a result,” Heathcote said by phone. European inflation quickened 2.4 percent in January, according to data yesterday, accelerating more than economists forecast and keeping pressure on policy makers to monitor price gains that are exceeding the European Central Bank’s limit. South Korea’s inflation accelerated 4.1 percent in January, breaching the central bank’s 4 percent ceiling, according to data from Statistics Korea today. Consumer prices in Indonesia, Southeast Asia’s biggest economy, rose 7.02 percent last month, after a 6.96 percent gain for December, the Central Bureau of Statistics data showed in Jakarta today. Oil rose 7.7 percent in the two days through yesterday as civil unrest in Egypt raised concern supplies may be disrupted. Corn has soared 83 percent and wheat 76 percent over the past year. Federal Reserve Last year, the Federal Reserve kept its benchmark interest rate at zero percent to 0.25 percent, helping send gold to a 10th straight annual gain. Consumer spending in the U.S. rose more than forecast in December, ending the strongest quarter in more than four years, the Commerce Department said yesterday. The weaker dollar and increased tensions in Egypt also provided “support for gold,” Heathcote said. The Dollar Index, which gauges the greenback’s value against six major currencies, fell for a second day. Precious metals often move inversely to the U.S. currency. Opposition groups in Egypt demanding President Hosni Mubarak’s ouster have urged more people onto the streets. Barrick Gold Corp., the world’s biggest producer of the metal, said central banks will likely buy more gold this year as they worry about U.S. dollar holdings, the Wall Street Journal reported, citing Chief Financial Officer Jamie Sokalsky. Silver for immediate delivery climbed as much as 1 percent to $28.3450 an ounce and last traded at $28.1987. The price tumbled 9.3 percent last month, the biggest loss since June 2009 and the first monthly decline since July 2010. Immediate-delivery platinum gained 0.3 percent to $1,799.50 an ounce, extending gains from a second monthly advance. Cash palladium jumped as much as 1.1 percent to $824.38 an ounce, the highest price since Jan. 24. Palladium rose 1.7 percent in January, a seventh monthly increase. To contact the reporter on this story: Sungwoo Park in Seoul at spark47@bloomberg.net To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net

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