BLBG:Gold May Climb as Retreat to a Two-Week Low Stokes Demand From Investors
Gold may gain for the first time in five days, cutting a weekly loss, as a drop to a two-week low spurs investors to buy the metal as a protection of wealth.
Gold slipped to $1,603.97 an ounce yesterday, the lowest since Oct. 5, and is heading for the first weekly drop in three. Prices have dropped 15 percent since touching a record early last month. European leaders meet this weekend in Brussels as they seek to contain the debt crisis.
“The price drop definitively offers an attractive buying opportunity,” said Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt. “Gold is still seen as a safe haven or a store of value at least in the mid to long term.”
Immediate-delivery gold gained $2.70, or 0.2 percent, to $1,623.50 an ounce by 11:22 a.m. in London. Prices are down 3.4 percent this week. Gold for December delivery rose 0.8 percent to $1,625.10 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. Prices reached a record $1,921.15 an ounce on Sept. 6 as investors sought to diversify away from equities and some currencies. The metal is up 14 percent this year.
Bullion rose to $1,623 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,620 at yesterday’s afternoon “fixing.”
Rescue Funds
Euro-area leaders may combine the region’s temporary and planned permanent rescue funds as of mid-2012 to release as much as 940 billion euros ($1.3 trillion) to fight the debt crisis. The plan is also aimed at breaking an impasse between Germany and France. Government leaders meet Oct. 23 and a second summit for Oct. 26 was set yesterday.
Global equities and commodities are also headed for weekly declines.
“Gold’s positive correlation with risk continues,” Edel Tully, a London-based analyst at UBS AG, wrote today in a report. “The difficulty in trading gold at the moment has frustrated many of its supporters, which is probably why the yellow metal has been struggling to sustain upside attempts, in addition to it having trouble bouncing off the lows.”
Silver for immediate delivery rose 0.3 percent to $30.69 an ounce. Palladium was up 1.7 percent at $597.25 an ounce. Platinum increased 0.1 percent to $1,496.75 an ounce.
To contact the reporter for this story: Nicholas Larkin in London at nlarkin1@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net
