Gold Falls For First Day in Four as Stocks, Dollar Climb

By Glenys Sim

March 16 (Bloomberg) -- Gold weakened for the first time in four days in Asia as a rally in global equities and the dollar’s strength curbed demand for a haven investment.

Asian shares climbed after Group of 20 finance ministers pledged to combat the global recession and restore the financial system. Bullion has fallen 1.7 percent this month as the benchmark MSCI Asia Pacific Index gained 0.7 percent.

“Gold will continue to have this loose relationship with the stock market and the dollar, trading in a broad $900 to $950 range as investors weigh their investment options,” Chen Yonglin, an analyst at Citic Securities Co., said from Shanghai.

Gold for immediate delivery fell as much as 0.7 percent to $923.47 an ounce, and traded at $926.16 at 2:26 p.m. in Singapore, paring the 3.5 percent gain in the last three days.

The dollar advanced against the euro for the first day in five on speculation European nations’ reluctance to boost spending will extend the region’s recession and add pressure for lower interest rates.

Assets in the SPDR Gold Trust, the biggest such fund backed by bullion, advanced 1.5 percent to a record 1,056.82 metric tons March 13, according to figures on the company’s Web site.

Quantitative Easing

The Bank of England said March 5 it will start printing money to buy government and corporate bonds to ward off deflation, a practice known as quantitative easing. The Swiss central bank cut its interest rate close to zero March 12 and started buying foreign currencies to stem the franc’s appreciation.

These moves increase the chances of the Federal Reserve “also moving to quantitative easing steps that trigger U.S. dollar weakness,” according to Deutsche Bank AG.

“We believe this would provide a more solid foundation to the gold price,” Deutsche analysts led by Michael Lewis, said in weekly a report. “If U.S. dollar weakness fails to appear we believe gap risk in the gold market will remain to the downside.”

Gold prices may rebound on demand for an alternative to currencies. Twenty of 30 traders, investors and analysts surveyed from Tokyo to Chicago last week advised buying gold this week. Four said to sell, and six were neutral.

Among other precious metals for immediate delivery, silver was down 1.1 percent at $13.07 an ounce, platinum gained 0.6 percent to $1,063 an ounce, and palladium was unchanged at $199 an ounce.

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