BLBG:Gold May Climb on $1 Trillion Lending Increase for IMF, Weakening Dollar
Gold may climb for a third day in London as the International Monetary Fund was said to seek to boost lending and as a weaker dollar spurred demand for an alternative investment.
The IMF is proposing a $1 trillion expansion of its lending resources to safeguard the global economy against any worsening of Europe’s debt crisis, according to an official at a Group of 20 nation. The dollar fell versus the euro before Greek Prime Minister Lucas Papademos resumes talks with private bondholders today. Gold climbed to a one-month high yesterday, helped by speculation about easing of monetary policy in China.
“The safe haven status quo continues to hold its ground as troubles in the euro zone are far from being resolved,” Andrey Kryuchenkov, an analyst at VTB Capital in London, wrote today in a report. “Further easing in the euro zone and accommodative monetary policies would be bullion supportive.”
Bullion for immediate delivery gained $3.97, or 0.2 percent, to $1,656.02 an ounce by 10:40 a.m. in London. Prices climbed to $1,667.90 yesterday, the highest since Dec. 13. Gold for February delivery was little changed at $1,656.40 on the Comex in New York.
“A weaker U.S. dollar should be supportive for gold,” Peter Fertig, owner of Quantitative Commodity Research Ltd. in Hainburg, Germany, said by phone today.
The metal climbed 10 percent in 2011, an 11th consecutive annual gain, as investors sought to diversify from equities and some currencies. While gold slid 14 percent since touching a record $1,921.15 in September, holdings in bullion-backed exchange-traded products are within 2 percent of last month’s all-time high. Assets were 2,360.8 metric tons yesterday, the most in four weeks, data compiled by Bloomberg show.
Global Growth
The IMF wants the agreement struck at the Feb. 25-26 meeting of G-20 finance ministers and central bankers, according to the official, who spoke on condition of anonymity because the talks are private. The World Bank cut its global growth forecast by the most in three years, estimating expansion at 2.5 percent this year, down from a June estimate of 3.6 percent.
“Core investment drivers have not changed significantly but have merely been delayed by the sovereign debt crisis surrounding the euro,” Walter de Wet, the head of commodities research at Standard Bank Plc in London, wrote in a report e- mailed yesterday. “Global liquidity will continue to grow in the current economic environment, which would be supportive for gold.”
Silver for immediate delivery rose 0.9 percent to $30.34 an ounce. Palladium was down 0.2 percent at $651.25 an ounce. Platinum slipped 0.6 percent to $1,513.25 an ounce.
To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net
