Gold Advances as Dollar Rally Stalls, Oil Gains on Rescue Plan

By Glenys Sim

Oct. 1 (Bloomberg) -- Gold rose in Asia as the dollar's rally against the euro stalled and crude oil advanced on speculation the U.S. Senate will approve a $700 billion bank rescue plan later today to revive credit markets.

The dollar index, a weighted measure against six currencies fell, increasing the appeal of gold as an alternative investment. The MSCI World, a gauge of 23 developed markets, had the steepest loss since October 1987 on Sept. 29 after the House of Representatives voted against the financial bailout.

``Amid the turmoil and huge dislocations in global financial markets, gold has benefited from safe-haven buying as risk aversion spiked to levels not seen since October 2002,'' Robin Bhar, senior metals analyst at Calyon in London said in a report e-mailed today.


Gold for immediate delivery gained as much as 1.5 percent to $883.87 an ounce, and traded at $881.63 an ounce at 1:26 p.m. in Singapore. Bullion capped its worst quarterly decline since 2004 yesterday. Silver for immediate delivery was up 1.4 percent at $12.1975 an ounce.

Technical charts some traders use to forecast price movements suggested near-term weakness in gold as equities rally, ``with risk of a pullback towards 848/828 support likely,'' analysts at Barclays Capital Inc., led by Jordan Kotick, said in a report today. The MSCI Asia Pacific Index climbed today, snapping a six-day losing streak. U.S. stocks jumped the most in six years yesterday.

Gold for December delivery was up 0.5 percent at $886.20 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.

Gold for June delivery on the Tokyo Commodity Exchange fell 0.5 percent 3,000 yen a gram ($881 an ounce) at 1:27 p.m. Singapore time.

To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net