By Kim Kyoungwha and Rudy Ruitenberg Dec. 28 (Bloomberg) -- Gold advanced in New York and London trading on speculation some investors are expanding their holdings after the metal fell from a record. Platinum rose to a three-week high. Bullion may gain this week as some investors buy the metal after its “excessive” drop from a record $1,226.56 an ounce on Dec. 3, a survey showed. Eleven of 21 traders, investors and analysts surveyed by Bloomberg said gold would rise. Seven forecast lower prices and three were neutral. “Some investors are taking advantage of recent price dips in gold to increase their holdings in a trade thinned by year- end holidays,” said Chae Unsoo, a trader with KEB Futures Co. in Seoul. “Still, given favorable economic data pointing to a U.S. recovery, speculation of a rate hike is rising, which may power the dollar and weaken gold.” Gold for February delivery added 0.8 percent to $1,113.30 an ounce as of 7:54 a.m. on the Comex division of the New York Mercantile Exchange. Gold for immediate delivery advanced 0.7 percent to $1,112.95 in London. Bullion has gained 26 percent this year, on course for a ninth annual advance, as investors sought to diversify their assets amid the worst global recession since World War II. “We find ourselves better able to sleep at night holding our gold positions intact,” economist Dennis Gartman said in his daily newsletter. By owning gold, “we find ourselves open to far less volatility,” he said. Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, reached 1,132.71 metric tons on Dec. 23. That’s more than five months of global mine supply, according to estimates from London-based researcher GFMS Ltd. Dollar Index The U.S. Dollar Index, a measure against six counterparts, fell 0.3 percent, dropping for a third day and taking its annual decline to 4.6 percent. Some investors buy gold as a hedge against a weakening of the dollar. Gold priced in euros and the Swiss franc rose 22 percent this year. Platinum jumped to a three-week high as expanding auto sales helped boost demand for the metal used in autocatalysts. Toyota Motor Corp., Japan’s largest carmaker, led the first gain in domestic auto production in 14 months as government incentives spurred demand. Platinum for immediate delivery rose as much as 1.9 percent to $1,491.50 an ounce, the highest price since Dec. 4, and traded at $1,480.50 an ounce at 1:51 p.m. Paris time. The metal advanced 58 percent this year, heading for its best year in at least two decades. Among other precious metals for immediate delivery, silver gained 0.5 percent to $17.575 an ounce and palladium declined 0.9 percent to $383.75 an ounce. To contact the reporter on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net; Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net.

Source