Concern over EU debt spurs demand for gold

Gold rose for a second day in New York as concern about Europe's debt crisis and monetary policy in the US spurred demand for the metal as a protection of wealth. European leaders ruled out tapping the European Central Bank's balance sheet to boost the region's rescue fund and outlined plans to aid banks. Federal Reserve Vice Chairman Janet Yellen said on Friday that a third round of large-scale securities purchases may become warranted to boost the US economy. "Gold investor interest has stabilised and physical demand continues to emerge, albeit at softer levels," Suki Cooper, an analyst at Barclays Capital in New York, wrote yesterday in a report. "We continue to expect gold prices to be cushioned amid the seasonally strong period for demand, and this remains key before investment demand returns to the driver's seat. We retain our positive view on gold given the macro backdrop." Gold for December delivery gained $21.60 (Dh 79.31) or 1.3 per cent, to $1,657.70 an ounce by 8am on the Comex in New York. Prices slipped 2.8 per cent last week. Immediate-delivery gold was 0.9 per cent higher at $1,657.13 in London. Article continues below Bullion is in the 11th year of a bull market and futures reached a record $1,923.70 an ounce on September 6 as investors sought to diversify away from equities and some currencies. The metal is up 17 per cent this year. Europe's 13th crisis-management summit in 21 months also explored how to strengthen the International Monetary Fund's role. The leaders excluded a forced restructuring of Greek debt, sticking with the tactic of enticing bondholders to accept losses to help restore the country's finances. Another summit will be held tomorrow. "The market is starting to say that talk's no longer worth anything, we need to start seeing some real, underlying action," said David Lennox, a resource analyst at Fat Prophets in Sydney. "While that's not happening in actual, physical action, I think gold will continue to trade up." Gold imports by India, the world's largest bullion consumer, may decline by as much as 30 per cent this month as higher prices weaken demand, Prithviraj Kothari, president of the Bombay Bullion Association, said in a phone interview in Mumbai. Imports may be 70 metric tons to 80 tons in October, compared with 100 tons a year earlier, he said. Silver for December delivery rose 1.2 per cent to $31.555 an ounce. Palladium for December delivery was up 1.9 per cent at $629.95 an ounce. Platinum for January delivery gained 1.9 percent to $1,538.60 an ounce.