Gold Heads for Second Monthly Gain in London, Buoyed by Dollar

By Stuart Wallace and Kim Kyoungwha

Oct. 30 (Bloomberg) -- Gold, little changed in London today, headed for a second monthly advance as a decline in the dollar buoyed demand for the metal as a hedge against further weakness in the U.S. currency.

The Dollar Index, a gauge of the greenback’s performance against six currencies, is on course for a fourth monthly drop, the worst performance since 2004. The U.S. economy expanded for the first time in more than a year in the third quarter, the Commerce Department said yesterday.

“Confirmation the U.S. economy had exited its worst contraction in 70 years gave equities and commodities a boost, sending the dollar and safe-haven currency trades south,” James Moore, an analyst at TheBullionDesk.com in London, said today in a note.

Gold for immediate delivery fell $2.89, or 0.3 percent, to $1,044.11 an ounce at 8:18 a.m. in London, for a monthly advance of 3.6 percent. The metal reached a record $1,070.80 on Oct. 14 and has gained 19 percent this year. Gold for December delivery lost 0.2 percent to $1,044.50 an ounce on the New York Mercantile Exchange’s Comex division.

Thirteen of 23 traders, investors and analysts surveyed by Bloomberg, or 57 percent, said bullion would fall next week. Seven forecast higher prices and three were neutral.

“I have never been a gold bug,” Paul Tudor Jones of Tudor Investment Corp. told investors in an Oct. 15 letter, a copy of which was obtained by Bloomberg News. “It is just an asset that, like everything else in life, has its time and place. And now is that time.”

Tudor Investment

Tudor Investment manages about $11.6 billion out of Greenwich, Connecticut. Fund manager John Paulson increased his bets on gold this year, while David Einhorn told clients of his Greenlight Capital Inc. hedge fund in January he was buying gold for the first time.

Gold holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by the precious metal, were unchanged yesterday at 1,104.43 metric tons, according to figures on the company’s Web site today.

Harmony Gold Mining Ltd., Africa’s third-largest producer of the metal, beat its own output guidance, raising production 5.6 percent during the fiscal first quarter. Output climbed to 373,431 ounces in the three months through September, from 353,752 ounces in the previous quarter, the Johannesburg-based company said today.

Among other precious metals for immediate delivery in London, silver dropped 0.7 percent to $16.575 an ounce.

Silver Holdings

Holdings in the iShares Silver Trust, the biggest exchange- traded fund backed by the metal, increased 131.43 tons to 8,744 tons as of Oct. 29, according to figures on the company’s Web site.

Platinum fell 0.6 percent to $1,327 an ounce and palladium was up 0.6 percent to $330.50 an ounce.

ING Groep NV raised its 2010 forecasts for gold, silver, platinum and palladium. Gold will average $1,025 an ounce next year, compared with a previous estimate of $925, the bank said in a report. The silver estimate rose to $15 from $13.50, platinum to $1,400 from $1,300, and palladium to $280 from $250.

To contact the reporters on this story: Kyoungwha Kim in Singapore at Kkim19@bloomberg.net; Stuart Wallace in London at swallace6@bloomberg.net.