Gold gained for the first time in five days in London as the biggest three-day drop since October 2008 spurred some investors to buy the metal on concern about economic growth and debt crises. Bullion slumped 8.8 percent in the previous three days as some investors sold to cover losses in other markets, which plunged on concern there may be another global recession. The metal has slid 13 percent from its Sept. 6 record and last week’s plunge prompted CME Group Inc. (CME) to raise margin requirements on futures contracts. Physical demand for gold is “exceptionally strong,” UBS AG said today in a report. “Although not many are yet prepared to dip their toes back in the market, there is a small but growing group who believe this pullback will prove to be a good buying opportunity,” Edel Tully, a London-based analyst at UBS, wrote in a report. “Gold needs to stabilise for now, after suffering a good deal of reputational damage with recent wild moves.” Immediate-delivery gold gained $44.05, or 2.7 percent, to $1,670.40 an ounce by 11:53 a.m. in London. It dropped to $1,532.72 yesterday, the lowest level since July 8. Gold for December delivery was 4.7 percent higher at $1,669.70 on the Comex in New York. The metal rose to $1,671 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,598 at yesterday’s afternoon fixing. Bull Market Gold is in the 11th year of a bull market, the longest winning streak since at least 1920 in London. Prices reached a record $1,921.15 on Sept. 6 as investors sought to diversify away from equities and some currencies. The metal tumbled 17 percent in October 2008 as the worst recession since World War II sent global equity and commodity markets tumbling. Bullion jumped 22 percent in the next two months. The Standard & Poor’s GSCI Index of 24 commodities yesterday fell to the lowest level since December and the MSCI All-Country World Index of shares last week touched the lowest since July 2010. CME raised margin requirements on gold and silver after trading yesterday and the Shanghai Gold Exchange will increase requirements from Sept. 29. “When the market gets very panicky, they sell everything off and they go for cash and Treasuries because that’s really the largest market where you can park your money,” Gijsbert Groenewegen, a partner at Silver Arrow Capital Management, said in a Bloomberg Television interview. “It’s a great opportunity to accumulate more gold and silver.” Debt Crisis Policy makers are under pressure to halt the European debt crisis that has Greece on the brink of default. The European Central Bank is likely to debate restarting covered-bond purchases and may discuss interest-rate cuts to ease funding strains next week, a euro-region central bank official said. Silver for immediate delivery gained 7.3 percent to $32.975 an ounce, after tumbling 23 percent in the past three days and touching a 10-month low of $26.07 yesterday. Silver slumped because it “is also an industrial metal,” said Groenewegen. “On the way down it acts as an industrial metal, on the way up it’s a precious metal. You see much more volatility also because the silver market is less deep than the gold market.” Platinum rose 1.2 percent to $1,579.23 an ounce, after dropping to $1,471.25 yesterday, the lowest level since May 2010. Palladium was up 2.9 percent at $649.75 an ounce. It fell to $605.25 yesterday, the lowest since October. To contact the reporters for this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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