Gold climbed for the first time in three days in London as a weaker U.S. dollar boosted demand for the metal as an alternative asset, and a price drop to a two- week low prompted purchases. Silver also gained. The dollar weakened for a second day against a basket of six major currencies including the euro and the yen, after European Union leaders agreed to create a mechanism to contain future debt shocks and the bloc’s central bank armed itself with more capital. Bullion typically moves inversely to the greenback. Gold has gained 26 percent this year. “You have a weaker U.S. dollar and stable Treasury yields which eases selling pressure,” Bayram Dincer, an analyst at LGT Capital Management in Pfaeffikon, Switzerland, said by e-mail. “After hitting some sell-trigger levels yesterday, it is continuous opportunistic buyers who are buying the dips.” Immediate-delivery bullion gained $5.75 an ounce, or 0.4 percent, to $1,376.03 an ounce at 8:51 a.m. London time. The metal touched $1,361.39 an ounce yesterday, the lowest price since Nov. 29, and has declined 0.7 percent this week. Futures for February delivery rose 0.4 percent to $1,376.50 an ounce on the Comex in New York. Some investors will buy gold if it falls below $1,375 an ounce, Bruce Ikemizu, head of commodity trading at Standard Bank Plc in Tokyo, said by phone today. The price may rise through the end of 2010, he said. “I don’t expect too much downside from here,” Ikemizu said. “Probably we’ll go up gradually. I think we have to wait until New Year to see a real move.” Wealth Protection Gold assets in exchange-traded products fell 1.87 metric tons to 2,097.83 tons yesterday, according to data compiled by Bloomberg from 10 providers. Holdings reached a record 2,104.65 tons on Oct. 14. The metal is headed for a 10th annual advance, as investors lost confidence in currencies and sought to protect their wealth from debt woes in Europe. Gold reached an all-time high of $1,431.25 an ounce on Dec. 7. Twelve of 24 traders, investors and analysts surveyed by Bloomberg, or 50 percent, said the metal will fall next week as investors want to bank profits before the end of the year to take advantage of gains this year. Eight predicted higher prices and four were neutral. Silver for immediate delivery climbed 0.5 percent to $29.03 an ounce, boosting this week’s gain to 1.3 percent. The metal has surged 72 percent this year, outperforming gold. Silver holdings in ETPs gained for a sixth straight day, adding 0.94 metric ton to 15,172.49 tons yesterday, the highest amount since at least February, data from four providers showed. Spot palladium was unchanged at $742.40 an ounce, while immediate-delivery platinum increased 0.4 percent to $1,705.20 an ounce. To contact the reporter on this story: Sungwoo Park in Seoul at spark47@bloomberg.net; Tony C. Dreibus in London at tdreibus@bloomberg.net. To contact the editor responsible for this story: Claudia Carpenter at ccarpenter@bloomberg.net.

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