Gold rose in London for a second day on speculation that central-bank measures to improve economies may trigger inflation and create demand for bullion as a hedge. The European Central Bank will probably cut its key interest rate to a record low today and offer banks longer-term loans to stem the region’s worst recession since World War II, according to a Bloomberg survey of economists. It has yet to start buying bonds, effectively printing money to reflate economies, a policy known as quantitative easing. “There are some expectations that the ECB will announce some sort of quantitative-easing measurements,” Bayram Dincer, a commodity analyst at Dresdner Bank in Zurich, said by phone today. “This is supportive for gold. In the long term, it could create inflationary pressures.” Bullion for immediate delivery added $4.08, or 0.5 percent, to $915.30 an ounce by 11:38 a.m. local time. June futures rose 0.6 percent to $916 in electronic trading on the New York Mercantile Exchange’s Comex division. Also today, the Bank of England will likely hold its key rate at 0.5 percent, according to a survey. The U.K. central bank, like its U.S. and Japanese counterparts, is buying bonds. Gold rose to $912.75 in the morning “fixing” in London, used by some mining companies to sell production, from $910 at yesterday’s afternoon fixing. Spot prices, which reached a record $1,032.70 in March 2008, are up 3.3 percent this week. Equities Climb Still, the MSCI World Index of shares gained for a seventh day on speculation banks need less capital than had been projected. ADP Employer Services said yesterday U.S. companies eliminated fewer jobs in April than economists had forecast, indicating the worst of the recession’s job losses may be past. Gold is often bought as a haven during economic turmoil. Federal regulators are expected today to unveil what U.S. Treasury Secretary Timothy Geithner said will be a “reassuring” picture of a banking system able to withstand whatever stresses the recession may inflict on it once a handful of institutions add to their capital base. Investors should “buy gold no matter what happens,” said Emanuel Georgouras, a precious-metals trader at Marex Financial Ltd. in London. In a report today, he predicted a “shift from buying gold as a safe-haven diversification into investing as an inflation hedge” if the stress-test results are reassuring and signal an economic recovery “on the horizon.” SPDR Holdings Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, fell to 1,104.09 metric tons yesterday from 1,104.45 tons on May 5. The fund last attracted new flows on April 9. Among other metals for immediate delivery in London, silver gained 1.8 percent to $13.97 an ounce. Platinum rose 2.3 percent to $1,166 an ounce, and palladium increased 3.1 percent to $236 an ounce. An economic recovery may increase demand for metals with industrial uses. The auto industry employs platinum and palladium in pollution-control gear and accounts for about half of their use. Silver, often associated with photography and jewelry, also is used in products from ball bearings to industrial catalysts, according to the Silver Institute.

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