Gold May Gain in London Trading as Physical Demand Strengthens

By Rachel Graham

Aug. 20 (Bloomberg) -- Gold, little changed today in London, may advance on signs that physical demand for gold is gaining after the biggest weekly drop in five months. Silver, platinum and palladium rose.

Demand for gold rose 7 percent to 736 metric tons in the second quarter, compared with the first quarter, the World Gold Council said Aug. 13. This includes jewelry demand, which showed the first quarterly increase in a year. Gold is finding ``some support'' because of strong demand from the jewelry industry and investors in exchange-traded funds, UBS AG said yesterday.

``Physical demand is robust,'' Afshin Nabavi, a senior vice president at MKS Finance SA, one of Switzerland's four bullion refiners, said by phone from Geneva. ``We've not seen this level of demand for some time.''

Gold for immediate delivery fell 65 cents to $813.55 an ounce as of 9 a.m. in London. Futures for December rose $1.70, or 0.2 percent, to $818.50 in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.

Among other metals for immediate delivery, silver gained 5.99 cents, or 0.5 percent, to $13.29 an ounce and palladium added 75 cents, or 0.3 percent, to $287.25. Platinum rose $6.25, or 0.5 percent, to $1,365.75 an ounce.

To contact the reporter on this story: Rachel Graham in London at rgraham13@bloomberg.net