Gold gained in London as some investors bought the metal after its drop to the lowest level in almost a month and as violence in Bahrain and the aftermath of Japan’s earthquake spurred demand for a protection of wealth. The metal dropped the most in six weeks yesterday, while commodities and equities plunged as Japan battled to prevent a nuclear meltdown that threatens to worsen damage to the economy from last week’s earthquake. Bahrain yesterday declared a state of emergency as Saudi Arabia-led military intervention failed to end demonstrations. “There was a lot of panic-selling yesterday as people wanted to raise cash and there’s concern that yesterday’s selling was a bit overdone,” said Walter de Wet, an analyst at Standard Bank Plc in London. “If you’re looking at the safe haven side, the Middle East and North Africa region dominates,” while the crisis in Japan may also support prices, he said. Immediate-delivery bullion rose $6.13, or 0.4 percent, to $1,401.82 an ounce at 11:40 a.m. in London. Prices dropped 2.2 percent yesterday and touched $1,381.22, the lowest level since Feb. 17. Gold for April delivery was 0.7 percent higher at $1,402.10 an ounce on the Comex in New York. Bullion fell to $1,398.50 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,400.50 at yesterday’s afternoon fixing. The Standard & Poor’s GSCI Index of 24 commodity futures tumbled 3.8 percent yesterday, the biggest drop since July 29, 2009. A fire and aftershocks struck the crippled Fukushima Dai- Ichi power plant today. Tokyo Electric Power Co. said a reactor containment vessel may have been breached, increasing the risks of radioactive leaks. The country is reeling from its strongest earthquake on record and subsequent tsunami last week. Tear Gas Gold climbed to a record $1,444.95 on March 7 as the civil war in Libya escalated after unrest spread in North Africa and the Middle East. Libyan leader Muammar Qaddafi set his sights on Benghazi as his forces moved into the gateway city of Ajdabiya, 100 miles (161 kilometers) from the rebel capital. Riot police cleared anti-government protesters from a central square in Bahrain’s capital. The stock market suspended trading. “Geopolitical tensions are likely to continue to set the tone of trading in the near term,” Barclays Capital analysts including Gayle Berry wrote in a report yesterday. “We retain a positive view on gold as many of the long-term investment drivers remain intact amid low interest rates.” The Federal Reserve yesterday reaffirmed its plan to buy $600 billion of Treasuries through June and retained a pledge to keep its benchmark interest rate “exceptionally low” for an “extended period.” In an upgrade of the central bank’s economic outlook, Chairman Ben S. Bernanke and his colleagues removed language that the recovery is “disappointingly slow” and that “tight credit” is holding back consumer spending. Silver Gains Silver for immediate delivery gained 0.6 percent to $34.455 an ounce after plunging 4.7 percent yesterday, the most Dec. 7. It climbed to $36.7525 on March 7, the highest level since February 1980, the year in which the metal reached a record $50.35 in New York. Palladium was up 1.6 percent at $715.50 an ounce. It yesterday slumped 5.6 percent, the most in three weeks, and fell to $689.50, the lowest price since Nov. 30. Platinum gained 0.9 percent to $1,717.85 an ounce after earlier today touching $1,680.55, the lowest level in three months. To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Kyoungwha Kim in Singapore at kkim19@bloomberg.net To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.

Source