Gold gained for a second day in London as prices that declined for three consecutive weeks spurred more demand for physical bullion and on mounting concern that Europe’s debt crisis will derail growth. Physical purchases remain “very visible” across much of Asia, Edel Tully, a London-based analyst at UBS AG, wrote in a report today. Gold slumped 8.6 percent last week, extending its biggest weekly losing streak since January, in part caused by investors selling the metal to cover losses in other markets. German Chancellor Angela Merkel signaled that Greece’s bailout may need to be renegotiated. Long-term investors and “physical buying will do a lot to help gold rebuild its reputation after the recent ugly selloff,” Tully wrote in the report. “The panic displayed over the past few days has dissipated to a great extent, though there certainly hasn’t been a stampede back into gold. Instead, the market remains hesitant and gold continues to consolidate.” Gold for immediate delivery rose $9.97, or 0.6 percent, to $1,660.10 an ounce by 11:34 a.m. in London. Prices dropped to $1,532.72 on Sept. 26, the lowest since July 8. Gold for December delivery was 0.6 percent higher at $1,662.50 on the Comex in New York. The metal fell to $1,655 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,659 at yesterday’s afternoon fixing. Gold is in the 11th year of a bull market, the longest winning streak since at least 1920. Prices reached a record $1,921.15 on Sept. 6 as investors sought to diversify away from equities and some currencies. Recession Danger Most advanced economies are entering into a recession, Nouriel Roubini, co-founder and chairman of Roubini Global Economics LLC, said in a panel discussion yesterday at the Bloomberg Dealmakers Summit in New York. Some euro-area countries want private creditors to take bigger writedowns on their Greek bond holdings, the Financial Times reported yesterday. Germany privately anticipates that the Mediterranean nation will default on its debt as early as this year, Bild reported Merkel as saying at a meeting of Christian Democratic lawmakers, citing unidentified participants. “The recent price declines have been because other markets are falling and some investors have to sell their gold to meet margin calls,” Dick Poon, precious metals trading manager at Heraeus Ltd., said by phone from Hong Kong. “The debt situation in Europe hasn’t changed and as that goes on, we continue to see strong demand for gold, which will keep prices supported.” Gold held through exchange traded products fell 8.6 metric tons to 2,221 tons yesterday, the lowest in two months. Assets reached a record 2,298.4 tons on Aug. 8, Bloomberg data show. Silver Slides Silver for immediate delivery declined 0.8 percent to $31.6538 an ounce. It touched a 10-month low of $26.07 on Sept. 26, when it slumped as much as 16 percent, and yesterday gained as much as 9 percent. “We would stay out of the silver market at the moment,” UBS’s Tully said. “It is the most irrational of metals, and certainly not for the faint-hearted.” Platinum was little changed at $1,564.18 an ounce, after dropping to $1,471.25 on Sept. 26, the lowest since May 2010. Palladium was up 0.9 percent at $653.25 an ounce. It fell to $605.25 two days ago, the lowest level 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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