Gold may gain for a fifth day in New York as a weakening dollar increases demand for an alternative investment. The dollar today slipped to a three-month low against the euro. Bullion and the greenback usually move inversely. European equities were lower today after climbing to a three-month high yesterday. China today said it plans to further open its gold market to trading and imports. Earlier this year, “the weakness in the euro was one reason why investors bought gold as a safe haven, but now a weaker dollar is a factor supporting gold again,” said Peter Fertig, owner of Quantitative Commodity Research Ltd. in Hainburg, Germany. Gold futures for December delivery added $3.70, or 0.3 percent, to $1,189.10 an ounce at 8:02 a.m. on the Comex in New York. Gold climbed the previous four days, the best run of gains since April. The metal for immediate delivery in London was 0.4 percent higher at $1,186.95. Bullion fell to $1,184 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,188.50 at yesterday’s afternoon fixing. Futures have slumped 6.1 percent since reaching a record $1,266.50 an ounce on June 21 on reduced European financial turmoil and on signs of a global economic rebound. Equities gained yesterday as U.S. manufacturing data exceeded forecasts and European banks reported better-than-estimated earnings. There is “less reason for buying gold as a safe-haven investment,” Fertig said. Down to $1,160? “With stock markets buoyed by optimism over a stronger economic recovery, people are willing to buy shares and sell gold,” said Wallace Ng, Hong Kong-based executive director with ABN Amro Securities Asia Ltd. “Gold could test the $1,160 level this week.” Rising wages will probably spur household spending in the next few quarters, even as weak job gains hurt consumer confidence, Federal Reserve Chairman Ben S. Bernanke said yesterday. China will let more commercial banks export and import gold and permit increased participation by foreign companies in the market, the country’s central bank said today. The government is also studying allowing foreign suppliers to deliver bullion directly to the Shanghai Gold Exchange, the People’s Bank of China said in a statement on its website, without giving a timeframe. China’s plans are positive for the market, UBS AG and LGT Capital Management said. Assets in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, were unchanged for a third day at 1,282.28 metric tons yesterday, according to the company’s website. Jewelry Usage Low interest rates will increase the metal’s investment appeal, while jewelry buyers are adapting to higher prices, LGT Capital Management said today in a report. Prices may consolidate at about $1,200 an ounce this month before rising to $1,300 in three months, LGT said. Gold loses appeal when borrowing costs climb because it pays no interest. UBS’s daily gold sales to India yesterday were the second highest this year, London-based analyst Edel Tully said in a report. The country is the world’s largest buyer of the precious metal. “Right now, physical demand is doing a good job of helping to provide gold’s price floor,” Tully said. Silver for September delivery in New York lost 0.1 percent to $18.395 an ounce. Platinum for October delivery was 0.6 percent lower at $1,593 an ounce. Palladium for September delivery fell 0.8 percent to $512 an ounce. To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net

Source