Gold rose for a second day in London as global stocks gained and the dollar weakened against the euro, increasing the metal’s appeal as an alternative investment. Equities advanced after the U.S. government announced more plans to prop up the country’s ailing banking system and speculation grew that China will pass another stimulus package. European Central Bank President Jean-Claude Trichet yesterday indicated policy makers may leave borrowing costs unchanged in February after cutting rates to 2 percent, matching a record low. Stock-market gains “have continued this morning,” which “reduces the need for investors to sell precious metals to cover lost assets,” Peter Fertig, a consultant for Dresdner Kleinwort, said by phone from Hainburg in Germany. Trichet’s comments support gold because another rate cut in February “would weigh on the euro,” he said. Gold for immediate delivery climbed as much as $8.03, or 1 percent, to $825.83 an ounce and traded at $824.08 an ounce by 11:15 a.m. in London. February futures added $16.40, or 2 percent, to $823.70 in electronic trading on the Comex division of the New York Mercantile Exchange. Still, bullion is heading for a 3.5 percent weekly loss in London as the dollar closes in on a 1.5 percent gain against the euro. The metal typically moves in the opposite direction to the U.S. currency. Gold rose to $824.25 an ounce in the morning “fixing” in London, used by some mining companies to sell production, from $810 at yesterday’s afternoon fixing. Real Interest Rates The dollar slipped as much as 1.3 percent against the euro today, while the MSCI World Index added as much as 1.8 percent. Policy makers from the U.S. to China have reduced borrowing costs aggressively in recent months to stimulate growth as the global recession worsens. Low real interest rates are “the most bullish environment for gold, as history would suggest this environment helped drive previous gold rallies,” Goldman Sachs Group Inc. said today in a note. Reports later today will probably show core U.S. consumer prices, which exclude food and energy, rose 0.1 percent last month, while consumer confidence and industrial production weakened. The cost of living including food and energy likely fell 0.9 percent, according to the median estimate in a Bloomberg News survey. “Declining industrial production and sentiment has lately been supportive for gold” as haven-buying increases, Fertig said. A slight increase in core prices “would not do too much harm” for the metal, he said. Gold in the SPDR Gold Trust, the largest exchange-traded fund backed by bullion, expanded by 0.6 percent to a record 795.25 tons, the company’s Web site shows. Investment in Zuercher Kantonalbank’s gold ETF also rose to a record last week. Among other metals for immediate delivery in London, silver added 1.5 percent to $10.755 an ounce. Platinum gained $12.25, or 1.3 percent, to $937.25 an ounce, and palladium was 2 percent higher at $183 an ounce.

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