Gold Rallies After Slide to Three-Week Low Lures Investors

By Kim Kyoungwha

Dec. 9 (Bloomberg) -- Gold advanced for the first time in five days on speculation that the metal’s slide to the lowest price in three weeks is attracting some investors.

Bullion slumped 2.6 percent yesterday as the dollar strengthened and after Lee Eung Baek, head of reserve management at the Bank of Korea, described gold as an “illusion” and said the bank is unlikely to raise holdings.

“There’s some buying on weakness in gold and oil so far,” said Ben Westmore, a commodities analyst with National Australia Bank in Sydney. “We’ve seen quite thin trading in commodities markets as it moves into the turn of the year. Some investors are still optimistic about the global recovery and willing to buy on weakness.”

Gold for immediate delivery strengthened as much as 0.8 percent to $1,136.90 an ounce before trading at $1,134 at 1:53 p.m. in Singapore. The price dropped to $1,124.60 an ounce yesterday, the lowest price since Nov. 16.

February-delivery futures on the New York Mercantile Exchange’s Comex unit slid 0.7 percent to $1,135.20.

The Dollar Index, a six-currency gauge of the dollar’s value, fell 0.1 percent today.

The dollar traded near a five-week high against the euro on speculation that credit ratings of more European nations will be cut after Fitch Ratings lowered Greece’s debt ranking. The euro bought $1.4724 from $1.4704.

“A rebounding dollar is giving an excuse to those who were trying to book profits ahead of year-end,” said Kim Kang Nam, a trader with Tongyang Futures Co. in Seoul. “Gold may find some support around $1,100.”

Silver for immediate delivery increased 0.6 percent to $17.695 an ounce. Palladium slipped 0.6 percent to $367.50 an ounce and platinum climbed 0.3 percent to $1,416 an ounce.

To contact the reporters on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net;