Gold may gain for a second day in London as concerns about economic growth and speculation the Federal Reserve may announce further stimulus measures boost demand for gold as an alternative investment. The International Monetary Fund yesterday cut its forecast for global growth and predicted “severe” repercussions if Europe fails to contain its debt crisis. Fed officials may provide more stimulus measures to support the economy after a two-day meeting today. Gold touched a record $1,921.15 an ounce on Sept. 6. Concerns over “future global growth and the unsustainable debt situations in Europe and the U.S.” will support gold, said Bayram Dincer, an analyst at LGT Capital Management in Pfaeffikon, Switzerland. The Fed measures may mean “real interest rates will be lower for longer and this should help gold prices.” Immediate-delivery gold gained $6.20, or 0.3 percent, to $1,809.82 an ounce by 9:24 a.m. in London. Gold for December delivery was 0.2 percent higher at $1,812.40 on the Comex in New York. Bullion is in the 11th year of a bull market, the longest winning streak since at least 1920 in London, as investors seek to diversify away from equities and some currencies. The metal is up 27 percent this year, outperforming global stocks, commodities and Treasuries. Greek Finance Minister Evangelos Venizelos made “good progress” in a second round of talks with the European Union and IMF aimed at staving off default, the EU said yesterday. Prime Minister George Papandreou’s government is trying to show it can reach budget targets required for the next 8 billion euro ($11 billion) payment from a bailout engineered in 2010. Operation Twist The Fed will decide to replace short-term Treasuries in its $1.65 trillion portfolio with long-term bonds, according to 71 percent of 42 economists surveyed by Bloomberg. The move, known as “Operation Twist” for its goal to bend the yield curve, will probably fail to reduce the 9.1 percent unemployment rate, 61 percent of the economists said. “At least until the end of the year, the problems in Europe and the U.S. aren’t going to go away and that will keep gold supported,” Yang Shandan, senior trader at Cinda Futures Co., said from Zhejiang, China. “We don’t rule out a test on the highs once the next wave of bad news hits.” Gold exchange-traded-product holdings fell 1.2 metric tons to 2,198.3 tons yesterday, data compiled by Bloomberg show. Assets reached a record 2,260.5 tons on Aug. 8. Silver for immediate delivery rose 0.9 percent to $40.1375 an ounce. Platinum gained 0.5 percent to $1,787.25 an ounce. Palladium was 0.4 percent higher at $719.25 an ounce. To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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