Gold may gain for a third day in London as concerns about debt in Europe and the U.S. spur demand for the metal as an alternative investment. Moody’s Investors Service yesterday cut Portugal’s credit rating to below investment grade, stoking speculation it will need a second bailout. President Barack Obama said he opposes a deficit-cutting measure that would only allow for a short-term increase in the U.S. debt limit as he called a meeting tomorrow with lawmakers to work toward fixes in the government’s finances. China said it will raise interest rates for the third time this year to curb inflation. “Portugal’s four-notch ratings downgrade is a reminder that Europe’s debt problems are far from solved,” Edel Tully, a London-based analyst at UBS AG, said in a report. “The focus is increasingly on the U.S. debt ceiling debate. An increasing focus on U.S. fiscal worries should also lead to safe-haven and diversification bids.” Immediate-delivery gold slipped $2.50, or 0.2 percent, to $1,513.15 an ounce by 11:43 a.m. in London. Gold for August delivery was 0.1 percent higher at $1,514.10 an ounce on the Comex in New York. Bullion rose to $1,515.80 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,510 at yesterday’s afternoon fixing. Gold is up 6.5 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. Debt Rating Moody’s slashed Portugal’s rating four levels to Ba2 with a negative outlook. The decision came two months after Portugal got a 78 billion euro aid package ($112 billion). The cut may further strain relations between the rating companies and European Union policy makers, who are trying to ensure their plan for investor involvement in a new Greek bailout doesn’t trigger a default. The Obama administration and congressional leaders are working to complete a deal on a long-term budget reduction package by July 22. The president’s comments yesterday were the second time in less than a week that he has come to the podium to publicly push lawmakers to secure a deal that addresses basic solutions to deficit spending while averting a first-ever U.S. default on its obligations. Silver for immediate delivery rose 0.1 percent to $35.5287 an ounce in London. Palladium fell 0.4 percent to $772 an ounce. Platinum was down 0.6 percent at $1,730.60 an ounce. To contact the reporter for this story: Nicholas Larkin in London at nlarkin1@bloomberg.net To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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