Gold, Little Changed in London, May Rise as Equities Advance

By Claudia Carpenter

July 30 (Bloomberg) -- Gold, little changed in London today, may rise after two straight drops as higher equities signal increased willingness to take on risk, weighing on the dollar.

The Dollar Index, a gauge of the currency’s value against six counterparts, fell as much as 0.6 percent after adding 1.3 percent in the prior two sessions, when gold dropped 2.5 percent. Bullion and the greenback tend to move inversely. The MSCI World Index of shares advanced as much as 0.5 percent after two retreats in a row.

Gains in equities are a sign of “falling risk aversion,” which may reduce demand for the dollar, pushing gold higher, said Carsten Fritsch, a Commerzbank AG analyst in Frankfurt.

Bullion for immediate delivery climbed 78 cents, or 0.1 percent, to $930.78 an ounce by 9:12 a.m. in London. The metal is heading for a weekly drop after two straight gains. Gold futures for December delivery added 0.3 percent to $932.80 an ounce on the New York Mercantile Exchange’s Comex division.

The euro advanced as much as 0.3 percent against the dollar. China is buying the single European currency “in size,” according to David Thurtell, an analyst at Citigroup Inc. in London.

“The dollar is likely to go lower, and thus gold higher today,” he said by e-mail.

Investors sold another 10.38 metric tons of gold from the SPDR Gold Trust, the biggest exchange-traded fund holding bullion, according to the company’s Web site.

Gold gained for a second week last week even as investors reduced ETF holdings. A lack of jewelry demand to absorb sales may “suggest downward moves could be magnified,” said James Moore, an analyst at TheBullionDesk.com in London. Gold is likely to remain dependent on moves in the dollar and equities, he said.

Platinum for immediate delivery fell 0.3 percent to $1,173 an ounce, palladium rose 0.8 percent to $256.42 an ounce, and silver climbed 0.3 percent to $13.35 an ounce.

To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net