BLBG: Gold May Gain on Debt Rating, China Credit Tightening Concern
By Nicholas Larkin and Glenys Sim
March 15 (Bloomberg) -- Gold, little changed in London today, may gain as debt rating concerns and the prospect of credit tightening in China prompts some investors to seek a haven in precious metals.
The U.S. and the U.K. have moved “substantially” closer to losing their AAA credit ratings as the cost of servicing their debt rose, said Moody’s Investors Service. Economists from Morgan Stanley said they expect “multiple” increases in China’s bank-reserve ratio requirements, with the next one “imminent.”
“Speculation both the U.K. and U.S. could lose their AAA- credit ratings should act to underpin” precious metals, James Moore, an analyst at TheBullionDesk.com in London, said in a report.
Gold for immediate delivery added $1.94, or 0.2 percent, to $1,103.84 an ounce at 9:36 a.m. local time. The metal dropped 2.9 percent last week. Bullion for April delivery was 0.2 percent higher at $1,103.60 on the Comex in New York.
China’s policy makers are seeking to sustain economic growth, driven by stimulus and looser credit that led to a construction boom, without stoking prices of stocks and property. The country’s central bank has already twice raised this year the amount of deposits banks must hold in reserve, after guiding three-month and one-year bill yields higher.
“China will raise interest rates and continue to increase the reserve requirement ratio” for banks, said Wu Zhengzheng, analyst at China International Futures Co. (Beijing). “Gold will be supported as long as uncertainties about the economy remain.”
Greece Aid Decision
The dollar rose 0.3 percent against the euro as German Finance Minister Wolfgang Schaeuble and French Finance Minister Christine Lagarde damped speculation at the weekend that there will be a decision on aid for Greece at a two-day meeting in Brussels starting today.
Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by the metal, were unchanged at 1,115.51 metric tons on March 12, according to the company’s Web site.
Among metals for immediate delivery in London, silver was down 0.4 percent at $16.995 an ounce. Platinum was little changed at $1,606.65 an ounce, and palladium slid 1.5 percent to $455.70 an ounce.
To contact the reporters on this story: Glenys Sim in Singapore at gsim4@bloomberg.net; Nicholas Larkin in London at nlarkin1@bloomberg.net.
