April 7 (Bloomberg) — Gold rose for the first time in four days in London after a drop to the lowest price in 10 weeks lured buyers, and as a decline in equities increased the metal’s appeal as an alternative investment. Silver also gained.
Bullion slipped 6.3 percent the past three days on speculation government efforts would revive the global economy, curbing demand for gold as a haven. The MSCI World Index of shares fell a second day as the euro-region economy contracted more than estimated.
“We fell too much yesterday,” and some investors and physical buyers may be taking advantage of lower prices, Bernard Sin, head of currency and metals trading at Swiss refiner MKS Finance SA, said by telephone from Geneva. “We fell as much as 3 percent yesterday and a lot of people were hurt.”
Gold for immediate delivery gained as much as $11.50, or 1.3 percent, to $880.40 an ounce, and traded at $879.75 by 10:47 a.m. in London. June futures added 0.9 percent to $881 an ounce in electronic trading on the New York Mercantile Exchange’s Comex division.
The metal rose to $879.25 in the morning “fixing” in London, used by some mining companies to sell production, from $870.25 at yesterday’s afternoon fixing. Bullion, trading 15 percent below the record $1,032.70 set in March 2008, has fallen 4.6 percent the past month while the MSCI Index has climbed 22 percent.
Europe’s recession deepened more than estimated in the fourth quarter, the European Union’s statistics office said today. Gross domestic product in the euro region declined 1.6 percent from the previous three months, the most in at least 13 years. A worsening economy has pushed exchange-traded fund holdings to records this year.
Investment in the SPDR Gold Trust, the biggest ETF backed by bullion, was unchanged at 1,127.37 metric tons yesterday, after declining on April 3 for the first time since March 23.
Bullion may climb back above $900 an ounce shortly should prices hold around $880, according to Pradeep Unni, an analyst at Richcomm Global Services DMCC in Dubai.
Gains above $900 would be “supported by the inflationary concerns due to the large bailout funds that have been pumped into various economies across the world,” he said in a report today. “This, in addition to investment demand, could prevent gold from an aggressive selloff.”
Among other metals for immediate delivery in London, silver rose 1 percent to $12.2563 an ounce. Platinum climbed 1.3 percent to $1,160 an ounce, and palladium was unchanged at $223.50 an ounce.
Author: Nicholas Larkin