Gold rose the most in more than a week as a drop in the dollar and renewed optimism that Europe will act to tame the debt crisis boosted investor demand.
The greenback slumped as much as 0.9 percent against a basket of six major currencies, declining for the fourth straight day. European leaders meet this weekend in Brussels as they seek to contain the region’s fiscal crisis. Before today, gold dropped 12 percent since the end of August as escalating debt woes threatened global growth and commodity demand.
“The weaker dollar and physical buying is supporting gold,” Frank Lesh, a trader at FuturePath Trading in Chicago, said in a telephone interview. “People want to know what Europe plans to do to stem the crisis.”
Gold futures for December delivery gained 1.9 percent to $1,643.60 an ounce at 10:04 a.m. on the Comex in New York. A close at that level would be the biggest advance since Oct. 10. Before today, the metal was down 4.2 percent this week, heading for the first weekly drop in three.
Bullion slipped to $1,604.70 yesterday, the lowest since Oct. 5.
“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.”
Bullion is in the 11th year of a bull market and futures reached a record $1,923.70 on Sept. 6 as investors sought to diversify away from equities and some currencies. Before today, the metal advanced 13 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.
Silver futures for December delivery rose 3.3 percent to $31.27 an ounce, heading for the biggest gain since Oct. 6.
To contact the reporters on this story: Debarati Roy in New York at droy5@bloomberg.net; Nicholas Larkin in London at nlarkin1@bloomberg.net
To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net
