Gold, little changed near a two-month high in London today, headed for a third weekly gain as a weaker dollar boosted the metal’s appeal as an alternative investment. The U.S. Dollar Index fell today to its lowest since Dec. 29 on speculation the country’s AAA credit rating may be cut, taking the gauge’s weekly drop to 3.3 percent. Equities in Asia slid as European stocks fluctuated and U.S. index futures rose. Bullion typically gains when the dollar weakens, and some investors buy gold as a store of value when stocks retreat. “Investors are flocking to gold as an ultimate safe haven against the sliding dollar,” Pradeep Unni, an analyst at Richcomm Global Services DMCC in Dubai, wrote today in a note. “There is an extreme fear that the U.S. economy may lose its AAA credit rating in due course, and this has been feeding the gold bulls pretty well.” Bullion for immediate delivery rose $1.60, or 0.2 percent, to $955.40 an ounce by 11:48 a.m. local time, erasing a drop. The commodity is up 2.5 percent this week. June futures added $4.30, or 0.5 percent, to $955.50 an ounce on the New York Mercantile Exchange’s Comex division. The metal rose to $952.50 in the morning “fixing” in London, used by some mining companies to sell production, from $937.50 at yesterday’s afternoon fixing. Twenty-three of 30 traders, investors and analysts surveyed by Bloomberg News said gold may extend gains next week as investors seek an alternative to equities. U.S. Economy Standard & Poor’s yesterday cut its outlook on the U.K.’s AAA credit rating, and Pacific Investment Management Co.’s Bill Gross, manager of the world’s largest bond fund, said the same will happen to the U.S. “eventually.” The U.S. economy will probably be slow to recover as banks tighten lending and consumers boost savings, Federal Reserve Bank of Boston President Eric Rosengren said yesterday. Governments around the world are selling more bonds than ever to battle the worst recession since World War II. The U.S. Treasury will auction about $101 billion of securities next week. “Given the background fears of inflation and prolonged economic recovery, we expect gold to remain a strong choice for investors,” James Moore, an analyst at TheBullionDesk.com in London, wrote in a note today. Still, “after gaining steadily for the past two weeks, it could be running out of steam as profit-taking emerges.” Wealth Preservation Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, was unchanged at 1,105.62 metric tons on May 21, the company’s Web site showed. The fund hasn’t had new flows since May 13. Holdings in ETF Securities Ltd.’s exchange-traded commodities fell 0.9 percent yesterday to 7.459 million ounces, according to its Web site. “With investors’ focus on wealth preservation unlikely to abate any time soon, gold ETFs and the physical investment arenas are set to continue experiencing healthy inflows,” Natixis Commodity Markets Ltd. said today in a report. “Although equity markets have shown signs of renewed vigor since the March lows, investors are still yet weary of leaving portfolios overexposed.” Gold will average $885 an ounce this year, Natixis said, up 1.5 percent from 2008. Among other metals for immediate delivery in London, silver gained 1 percent to $14.665 an ounce. Platinum was almost unchanged at $1,152.25 an ounce, and palladium was 0.6 percent lower at $233 an ounce. Goldman Sachs Group Inc. raised its 2009 forecast for platinum by 10 percent to $1,158 an ounce, citing possible stronger demand for metals in a report today.

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