Gold Advances in London on Rising Demand for Haven Investment

By Rachel Graham

Oct. 7 (Bloomberg) -- Gold rose for a second day in London, buoyed by demand for a haven from financial market turmoil as banking shares tumble around the world. Platinum also rose.

Australia slashed interest rates by the most in 16 years, fueling speculation other central banks plan cuts to ease the financial crisis. The U.K. government may invest at least 45 billion pounds ($79 billion) in the country's banks, two people with knowledge of the situation said.

Gold ``should look to make further gains in the coming days as flight-to-safety demand increases,'' James Moore, an analyst at TheBullionDesk.com, wrote today in a report.

Gold for immediate delivery rose $28.27, or 3.3 percent, to $888.02 an ounce in London as of 11:23 a.m. in London. Futures for December rose $23.30, or 2.7 percent, to $889.50 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.

ETF Securities Ltd., a provider of contracts tracking commodities, said its investment products backed by gold have attracted $93 million in funds in the past six days, the largest increase in 10 weeks.

``In volatile times like these, gold comes into its own,'' Chief Operating Officer Nik Bienkowski said in an e-mailed statement. ETF manages ETFS Physical Gold.

Gold in the SPDR Gold Trust, the largest exchange-traded fund backed by bullion, increased 0.6 percent yesterday.

The amount of gold held by the company rose to 744.54 metric tons from 739.95 tons on Oct. 3, according to figures posted on the company's Web site. The fund reached a record 755.26 tons on Sept. 30, an amount that would place it eighth in a ranking of central bank holdings.

Among other metals for immediate delivery, silver rose 66.5 cents, or 6 percent, to $11.705 an ounce, platinum advanced $40.75, or 4.2 percent, to $1,013.75 and palladium added $3.75, or 1.9 percent, to $201.50 an ounce.

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