BLBG: Gold Rebounds From Three-Week Low as Weaker Dollar Spurs Demand
By Nicholas Larkin and Kim Kyoungwha
Oct. 29 (Bloomberg) -- Gold rose in London, rebounding from a three-week low as a weaker dollar increased the metal’s appeal as an alternative investment and some investors increased holdings to take advantage of the decline.
The dollar fell for the first day in five against the euro before a report that may show the U.S. economy, the world’s biggest, exited a recession in the third quarter, stoking demand for higher-yielding currencies. Before today, gold had dropped 2.6 percent this week. The metal is trading 3.4 percent below a record $1,070.80 an ounce reached on Oct. 14.
“The dollar will continue to be the main driver,” Bernard Sin, head of currency and metals trading at bullion refiner MKS Finance SA in Geneva, said by phone today. “At this level, some people consider gold cheap. We’re seeing some increased physical demand from Asia.”
Gold for immediate delivery climbed $6.43, or 0.6 percent, to $1,034.53 an ounce by 9:26 a.m. local time, erasing a drop to $1,026.60, the lowest price since Oct. 6. December gold futures rose 0.4 percent to $1,035 an ounce on the New York Mercantile Exchange’s Comex division.
“We did have a fairly strong selloff overnight,” said Darren Heathcote, head of trading at Investec Bank Ltd. in Sydney. “Probably that’s a short-term bearish move. Certainly there’s some safe-haven buying.”
Best Since 1948
The metal is up 17 percent this year and heading for a ninth consecutive annual increase, the best performance since at least 1948. The dollar has declined 5.3 percent in 2009 against the euro, and slipped as much as 0.3 percent today.
The U.S. economy probably expanded at a 3.2 percent annual pace from July through September after shrinking in the previous four quarters, according to the median estimate of 79 economists surveyed by Bloomberg News. The Commerce Department figures are due at 12:30 p.m. London time.
Among other precious metals for immediate delivery in London, silver rose 1.2 percent to $16.34 an ounce. Platinum added 0.7 percent to $1,317.50 an ounce, while palladium gained 1 percent to $319 an ounce.
Palladium held in ETF Securities Ltd.’s exchange-traded products rose 0.9 percent to a record 580,283 ounces yesterday, according to the company’s Web site. Silver holdings added 15,197 ounces to an all-time high of 21.414 million ounces, while platinum assets gained 1.6 percent to 396,308 ounces.
