Gold Gains in London Trading on Physical Demand, Weaker Dollar

By Rachel Graham

Sept. 4 (Bloomberg) -- Gold rose for the first time in five sessions as buyers replenished stocks and the dollar's decline against the euro buoyed demand for the metal as an alternative investment.

India, the world's biggest buyer of bullion, increased imports of the metal in August for the first time in 11 months as prices dropped 9 percent, according to the Bombay Bullion Association Ltd. this week. Turkish gold imports advanced 70 percent last month compared with a year earlier.

``Physical demand continues to be very strong worldwide,'' Afshin Nabavi, a senior vice president at MKS Finance SA, one of Switzerland's four bullion refiners, said by phone from Geneva. ``And the dollar is a little bit under pressure.''

Gold for immediate delivery gained $10.74, or 1.3 percent, to $812.04 an ounce as of 8:52 a.m. in London. Gold futures for December rose $8.80, or 1.1 percent, to $817 an ounce in electronic trading on the Comex division of the New York Mercantile Exchange.

Gold may gain 10 percent by the end of the year, driven by demand for jewelry during the Indian wedding and festival season, according to JPMorgan Chase & Co. data.

The season has boosted prices every year since 2002 with September the strongest buying month, JPMorgan analysts led by Brendan James said in a report. Over the past decade, gold has risen by an average of 10.1 percent from September through December, according to a study by the broker.

Among other metals for immediate delivery, silver rose 14 cents, or 1.1 percent, to $13.05 an ounce. Platinum was unchanged at $1,388.50 an ounce and palladium rose $4.50, or 1.6 percent, to $291.50 an ounce.

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