Gold rebounded after dropping from an all-time high above $1,900 an ounce as investor concern that worsening sovereign-debt crises are exacerbating a global economic slowdown increased demand for a store of value. Immediate-delivery gold advanced as much as 1.4 percent to $1,853.98 before trading at $1,847.07 at 12:21 p.m. in Singapore. The metal touched a record $1,913.50 yesterday before closing 3.7 percent lower on speculation that the U.S. Federal Reserve will act to stimulate the faltering economy, boosting stocks. Japan’s sovereign-credit rating was lowered by Moody’s Investors Service today, following the first cut of the U.S.’s sovereign grade this month by Standard & Poor’s. The move comes amid concern the euro-area debt crisis may worsen after German Chancellor Angela Merkel rejected a call by her nation’s Labor Minister Ursula von der Leyen for countries to put up gold as security for bailouts, reflecting euro-area divisions. “Three pillars are set to strengthen and drive prices further into uncharted territory,” Barclays Capital analysts including Suki Cooper said in a report today. These are a “structural shift in macroeconomic instability,” investment demand and the return of central-bank buying, they said. Central bankers from around the world gather on Aug. 26 in Jackson Hole, Wyoming, for an annual meeting that last year saw Fed Chairman Ben S. Bernanke hint at a second round of asset purchases. That’s created speculation the Fed may move again at this meeting to bolster the economy. “The macro environment is evolving increasingly favorably for gold,” wrote Cooper. “A return of market confidence in the state of the global economy, coupled with high and rising real interest rates and controlled inflation, will be required to quell its gains.” Real interest rates are the difference between lending rates and inflation. Gold for December delivery in New York fell as much as 1.6 percent to $1,831.50 an ounce before trading at $1,849.90. Cash silver gained 0.5 percent to $42.1425 an ounce and platinum increased 0.6 percent to $1,874 an ounce. Spot palladium fell 0.2 percent to $760.50 an ounce. To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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