BLBG:Gold Advances for a First Day in Three as Weakening Dollar Stokes Demand
Gold gained for the first time in three days in London as a weaker dollar spurred demand for the metal an alternative investment.
The dollar declined versus the euro before the European Central Bank allots a second round of unlimited three-year funds tomorrow to help the region’s banks. European equities gained after Germany’s parliament voted to approve a second package of financial aid for Greece. Holdings in bullion-backed exchange- traded products extended a climb to a record yesterday.
“The euro is stronger against the dollar and that’s one of the major supportive factors” for gold, Peter Fertig, owner of Quantitative Commodity Research Ltd. in Hainburg, Germany, said today by phone. Higher equities are “also supportive” for commodities including gold, he said.
Bullion for immediate delivery gained 0.5 percent to $1,776.52 an ounce by 9:06 a.m. in London. Gold for April delivery was 0.2 percent higher at $1,778.10 on the Comex in New York.
Gold prices are up 14 percent this year after a 10 percent increase in 2011, an 11th consecutive annual gain. Holdings in bullion-backed ETPs (.GLDTONS) rose 1.3 metric tons to 2,398.2 tons yesterday, data compiled by Bloomberg show.
European banks are likely to tap the ECB for 470 billion euros ($631 billion) in three-year funds, according to a Bloomberg News survey of analysts. That would compare with the 489 billion euros taken by lenders at the long-term refinancing operation on Dec. 21.
“I like the $1,700 to $2,000 range based on the macroeconomic factors as they exist today,” Chuck Jeannes, chief executive officer at producer Goldcorp Inc. (G), said in an interview yesterday. “It’s certainly set the table for a much higher gold price.”
Silver Rises
Silver for immediate delivery rose 0.7 percent to $35.645 an ounce. It’s the best-performing precious metal this year, up 28 percent. An ounce of gold bought as little as 49.76 ounces of silver today, the least since Nov. 1.
Palladium was little changed at $706.50 an ounce. Platinum gained 0.3 percent to $1,712 an ounce.
Impala Platinum Holdings Ltd. (IMP) said about 9,000 dismissed employees returned to work at its Rustenburg mine in South Africa by yesterday and 11,600 who never went on strike. The company dismissed workers after an illegal strike that has halted output for about a month.
“Platinum may continue to enjoy some South African supply- risk premium as operations have yet to resume,” Edel Tully, an analyst at UBS AG in London, wrote in a report today. “We doubt that the potential for a supply shock out of South Africa is enough to justify a significantly higher platinum price.”
To contact the reporter 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: John Deane at jdeane3@bloomberg.net
