Gold Advances for First Time This Week on Economy Speculation

By Nicholas Larkin

Feb. 27 (Bloomberg) -- Gold rose for the first time this week in London on speculation economic reports will show the U.S. economy is worsening, raising demand for the precious metal as a store of value.

European equities fell and U.S. stock-index futures dropped before a report that may show the U.S. economy shrank more quickly that previously estimated in the fourth quarter. Other reports today may show businesses contracted this month at the fastest pace in 27 years and consumer sentiment declined. Still, the gold price is set for a weekly drop of 3.9 percent.

“Economic data may be disappointing,” said Peter Fertig, owner of Quantitative Commodity Research Ltd. in Hainburg, Germany. “That may be negative for the stock market and supportive for gold as a safe haven.”

Bullion for immediate delivery added as much as $8.27, or 0.9 percent, to $954.47 an ounce, erasing a drop of as much as 1 percent. It was at $953.59 an ounce at 1:13 p.m. local time, 5.2 percent below the 11-month high of $1,006.29. April futures rose $12, or 1.3 percent, to $954.60 an ounce in electronic trading on the New York Mercantile Exchange’s Comex division.

Continued concern about the safety of banks may add to demand for gold. Stock in Citigroup Inc. plunged in New York after the U.S. government bailed the bank out for a third time.

Among other metals for immediate delivery in London, silver gained 1 percent to $13.26 an ounce. Platinum added 1 percent to $1,063.50 an ounce and palladium added 0.3 percent to $197.50 an ounce.

To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net