Gold advanced, rebounding from a six- week low, on speculation the euro will strengthen further against the dollar amid expectations that the European Central Bank will raise interest rates this week. Immediate-delivery gold increased as much as 0.4 percent to $1,493.75 an ounce at 11:37 a.m. in Singapore. The euro climbed to a three-week high against the dollar before the July 7 central bank meeting. Gold dropped to $1,478.83 an ounce in on Friday, the lowest level since May 17. Spot silver climbed 0.9 percent to $34.195 an ounce. “If the euro benefits from the expected rate rise, you may expect gold to follow,” Darren Heathcote, head of trading at Investec Bank (Australia) Ltd., said today. Euro-area inflation remained at 2.7 percent in June, exceeding the central bank’s 2 percent ceiling for a seventh month. The ECB benchmark rate will rise to 1.5 percent from 1.25 percent, according to all 54 economists surveyed by Bloomberg News. European finance ministers authorized on July 2 an 8.7 billion-euro ($12.7 billion) loan payout to Greece by mid-July. Gold may extend its rebound as demand for the metal as an inflation hedge and haven persists, Heathcote said by phone from Sydney. The price may increase to $1,690 an ounce in the next 12 months, Goldman Sachs Group Inc. said in a July 1 report. The metal has climbed 5.1 percent this year, extending a 10-year rally, the longest winning streak since at least 1920. The August-delivery contract added 0.8 percent to $1,493.70 an ounce on the Comex in New York. Gold declined in the past two months as investors cut long positions, or bets prices will gain. Managed-money firms reduced their net-long position in gold futures and options by almost 20 percent to 181,356 contracts in the week ended June 28, according to U.S. Commodity Futures Trading Commission data. That’s the worst pullback since September 2008. Cash platinum increased 0.2 percent to $1,723.50 an ounce and spot palladium also gained 0.2 percent to $761 an ounce. To contact the reporter on this story: Chanyaporn Chanjaroen in Singapore at cchanjaroen@bloomberg.net. To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net.

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