Gold Gains for Second Day in London on Sinking Dollar, Equities

By Marianne Stigset

Sept. 15 (Bloomberg) -- Gold gained for a second session in London as Lehman Brothers Holding Inc.'s looming bankruptcy pushed the dollar and stocks lower, prompting investors to seek a hedge against financial market risk. Platinum also advanced.

U.S. equity-index futures and stocks in Asia and Europe dropped after Lehman said today it would file for bankruptcy and Bank of America Corp. agreed to acquire Merrill Lynch & Co., the world's biggest brokerage firm. The dollar retreated against the euro and the yen.

``Systemic risk indicators have adjusted upward, which is supportive of precious metals,'' Manqoba Madinane, a commodity analyst at Standard Bank Group Ltd. in Johannesburg, said in a report today. ``Following the Lehman Brothers decision, we believe risk will stay high, which could keep the greenback under pressure.''

Gold for immediate delivery climbed $12.45, or 1.6 percent, to $778.95 an ounce as of 8:16 a.m. in London. The metal declined 4.7 percent last week, the second straight weekly decline.

``Gold has jumped higher on the Asian opening this morning following the dollar drop and with technical indicators still showing the market oversold and physical demand still seasonally strong,'' James Moore, an analyst at TheBullionDesk.com, wrote in a report.

Gold futures for December climbed $16.80, or 2.2 percent, to $781.30 an ounce in electronic trading on the Comex division of the New York Mercantile Exchange.

Weekly Survey

Fifteen of 28 traders, investors and analysts surveyed by Bloomberg from Mumbai to Chicago on Sept. 11 and Sept. 12 advised buying gold. Nine said to sell, and four were neutral.

Hedge-fund managers and other large speculators decreased their net-long position in New York gold futures in the week ended Sep. 9, according to U.S. Commodity Futures Trading Commission data.

Speculative long positions, or bets prices will rise, outnumbered short positions by 82,655 contracts on the Comex division of the New York Mercantile Exchange, the Washington- based commission said in its Commitments of Traders report from Sept. 12.

Among other metals for immediate delivery, silver gained 7 cents, or 0.6 percent, to $10.95 an ounce, palladium rose $1.75, or 0.7 percent, to $248.25 an ounce.

Platinum for immediate delivery rose $7, or 0.6 percent, to $1,217 an ounce.

To contact the reporter on this story: Marianne Stigset in Oslo at mstigset@bloomberg.net