Gold may gain for a third day in London as a weaker dollar and concern about Europe’s debt crisis spur demand for an alternative investment. The dollar fell against six major currencies before a report forecast to show U.S. home sales dropped in May to this year’s low. Greek Prime Minister George Papandreou faces a confidence vote in his government today that may determine whether Greece becomes the first euro-area country to default. “The softer dollar tone has lent some support to the precious complex,” James Moore, an analyst at TheBullionDesk.com in London, said today in a report. “Greece looks set to be the focus of attention.” Immediate-delivery gold rose $2.95, or 0.2 percent, to $1,543.65 an ounce by 10:58 a.m. in London. Gold for August delivery was up 0.2 percent at $1,544.40 an ounce on the Comex in New York. Bullion fell to $1,543 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,544 at yesterday’s afternoon fixing. The International Monetary Fund, contributor of a third of the bailout money for Greece, Ireland and Portugal, has warned European leaders that a failure to take decisive action on the debt crisis risks triggering “large global spillovers.” At the same time, Papandreou is struggling to convince Greeks to accept a 78 billion-euro ($112-billion) package of state-asset sales and budget cuts, which include a “crisis levy” on wages. Gold is up 8.6 percent in 2011 after climbing the past 10 years, the longest run of gains in at least nine decades. Europe’s debt crisis helped bullion reach a record $1,577.57 on May 2. ‘Bullish’ Outlook “The outlook for gold still remains bullish,” said Kunal Shah, head of commodity research with Nirmal Bang Commodities Pvt. in Mumbai. “We have not seen a permanent solution to the debt crisis which is going on in the euro zone, which should support gold prices.” Bullion may average $1,500 an ounce this year and $1,550 in 2012, the Australian Bureau of Agricultural and Resource Economics and Sciences said in a report today. The metal has averaged $1,445 so far in 2011. “Uncertainty about the ability of many developed economies to stimulate economic growth and control growing budget deficits is expected to encourage investment demand for gold as a lower risk, or safe haven, asset,” the Canberra-based agency said. Silver for immediate delivery gained 0.2 percent to $36.14 an ounce in London. Holdings of the metal in exchange-traded products declined 13.6 metric tons to 13,551.9 tons yesterday, the lowest level since September. Palladium rose 0.7 percent to $753.75 an ounce. Platinum was up 0.6 percent at $1,740.50 an ounce. To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Madelene Pearson in Mumbai at mpearson1@bloomberg.net To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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