By Nicholas Larkin and Kim Kyoungwha April 14 (Bloomberg) -- Gold rose in New York as a weakening dollar and concern about government debt increased demand for the metal. Palladium climbed to a 25-month high. The dollar was little changed against the euro after a four-day decline. Gold, which typically moves inversely to the greenback, climbed to a four-month high of $1,170.70 an ounce on April 12 as the U.S. currency fell to a three-week low. Bullion may trade at $1,050 to $1,150 in coming months before reaching a record later this year or early in 2011, researcher GFMS Ltd. said. “People are looking for short-term direction, and currencies will be back as a driver” of gold prices, said Wolfgang Wrzesniok-Rossbach, head of sales and marketing at Hanau, Germany-based Heraeus Metallhandels GmbH. Investors “are looking at the instability of the financial system with regard to debt problems,” weakening gold’s correlation with the dollar, he said. Gold futures for June delivery added $7.20, or 0.6 percent, to $1,160.60 an ounce at 8:05 a.m. on the Comex in New York. Prices rose in the first quarter even as the dollar gained against the euro, the second quarter in a row that both the metal and the U.S. currency climbed. Bullion for immediate delivery in London was 0.8 percent higher at $1,160.05. Higher ‘Fixing’ The metal rose to $1,159 an ounce in the morning “fixing” in London, used by some mining companies to sell production, from $1,148.25 at yesterday’s afternoon fixing. Gold may pause before advancing toward $1,300 as investors’ mounting concern about sovereign debt spurs demand, GFMS said today in a report. Spot prices reached a record $1,226.56 on Dec. 3. Greece was offered a rescue package worth as much as 45 billion euros ($61.2 billion). The country faces the danger of a “death spiral” because the cost of borrowing in the euro region’s aid plan is too high, billionaire investor George Soros said yesterday in London. An expected revaluation of the yuan would make gold more appealing to Chinese investors by reducing its price for holders of the currency and potentially fueling concern about inflation, UBS AG said. “First and foremost, gold will become cheaper in yuan terms, and this should stoke additional interest in the yellow metal,” Edel Tully, London-based analyst at the bank, wrote in a report. “And if the yuan revaluation is interpreted as a signal of government confirmation that inflation is indeed a problem, this would likely boost gold’s appeal.” Stronger Yuan? China may allow the yuan to appreciate by June 30 to curb inflation while avoiding a one-time jump in value that might slow exports, a survey of analysts showed. Gold consumption in China may double within the next 10 years as the nation’s economy continues to expand and increase national wealth, the World Gold Council said on March 29. Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by gold, were unchanged at a record 1,141.04 metric tons for a second day yesterday, according to the company’s Web site. Silver for May delivery in New York gained 0.8 percent to $18.40 an ounce. Platinum for July delivery rose 0.8 percent to $1,730.90 an ounce. Palladium for June delivery climbed as much as 5.6 percent to $550.95 an ounce, the highest price since March 6, 2008, and last traded at $546.80. Palladium may be in deficit for “most” of the next decade as Russia depletes stockpiles and uses for the metal increase, Neville Nicolau, chief executive officer of Anglo Platinum Ltd., said yesterday. The company produces about 21 percent of the world’s palladium. Platinum and palladium are used mainly for jewelry and in automotive pollution-control gear. Platinum may reach $2,000 in the second half of this year, UniCredit SpA said today in a report.

Source