BLBG: Gold Rebounds as Buyers May Emerge After Price Drop, Inflation
April 20 (Bloomberg) -- Gold rose for the first time in three days in London on speculation signs of inflation and prices near a two-week low will revive demand for the metal.
Prices had dropped 2 percent in the past two days as advances in the dollar and a U.S. government lawsuit against Goldman Sachs Group Inc. curbed demand for commodities. India raised interest rates for the second time in a month to curb inflation and producer prices in Germany, the largest retail investment market for gold, accelerated last month.
"You would expect to see some consumer demand down here," said Martyn Whitehead, head of metals sales at Barclays Capital in London. "If inflation begins to creep back, that's a good environment for gold."
Gold for immediate delivery jumped $5.88, or 0.5 percent, to $1,141.63 an ounce at 9:07 a.m. local time. Bullion futures for June delivery advanced 0.6 percent to $1,142.20 on the Comex in New York.
Producer prices in Germany rose 0.7 percent in March, compared with no change in February, the Bundesbank in Frankfurt said today. Economists expected a rise of 0.5 percent, the median in a Bloomberg survey.
Germany accounted for 134 metric tons of retail investment demand last year, more than all of North America, according to London-based research company GFMS Ltd. The total doesn't include fund purchases, jewelry or bar hoarding.
India, the world's largest buyer of gold for jewelry, has inflation of almost 15 percent. Australia's central bank policy makers cited the country's mining boom leading to inflation as a reason for raising rates two weeks ago.
Advances in gold prices may be limited as the dollar extended gains today and the higher rates in India make gold more expensive, Whitehead said. Higher rates in India will "ultimately have an impact on the affordability of gold."
Silver increased 1.1 percent to $17.931 an ounce, platinum advanced 0.6 percent to $1,705.30 an ounce and palladium gained 0.7 percent to $541.75 an ounce.
--With assistance from Kim Kyoungwha in Singapore, Jacob Grebe in Sydney, Cherian Thomas in Mumbai and Kristian Siedenburg in Budapest. Editors: John Deane, Dan Weeks.
