BLBG: Gold Advances as Drop to a Two-Week Low Increases Demand From Investors
Gold gained for the first time in five days in New York, cutting a weekly loss, as a drop to a two-week low spurred investors to buy the metal as a protection of wealth.
Gold futures slipped to $1,604.70 an ounce yesterday, the lowest price since Oct. 5, and is heading for the first weekly drop in three. Prices have retreated 15 percent since touching a record early last month. European leaders meet this weekend in Brussels as they seek to contain the region’s 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.”
Gold for December delivery gained $23.50, or 1.5 percent, to $1,636.40 an ounce by 7:59 a.m. on the Comex in New York. Prices are down 2.8 percent this week. Immediate-delivery gold was 0.9 percent higher at $1,635.09 in London.
Bullion is in the 11th year of a bull market and futures reached a record $1,923.70 an ounce on Sept. 6 as investors sought to diversify away from equities and some currencies. The metal is up 15 percent this year.
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.
‘Frustrated’ Supporters
“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 December delivery rose 2.5 percent to $31.04 an ounce. Palladium for December delivery was up 4.7 percent at $611.85 an ounce. Platinum for January delivery gained 1.1 percent to $1,507.10 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
