Gold Gains in London Trade as December Drop Attracts Investors

By Stuart Wallace and Glenys Sim

Jan. 6 (Bloomberg) -- Gold advanced in London as last month’s decline, the steepest in more than a year, spurred demand from investors. Platinum rose to the highest price since August 2008.

Gold fell 7 percent in December, the worst month since October 2008 and paring the annual advance to 24 percent. The metal gained for a ninth year as investors sought to hedge against a weaker dollar by buying bullion. The U.S. Dollar Index, a gauge against six counterparts, rose 0.1 percent today.

Gold “looks set to track the dollar in the coming sessions,” James Moore, an analyst at London-based TheBullionDesk.com, wrote in a report today. “Dips are likely to draw further bargain-hunter support from investors and physical players.”

Gold for immediate delivery rose as much as 0.7 percent to $1,126.13 an ounce and traded at $1,126.05 by 8:49 a.m. in London. Gold futures for delivery in February on the Comex division of the New York Mercantile Exchange gained 0.7 percent to $1,126.10.

Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by the metal, were unchanged at 1,128.75 metric tons yesterday. Gold assets in exchange-traded products of ETF Securities Ltd. fell 0.1 percent yesterday to 7.8 million ounces, according to data from the company.

“Precious metals become more attractive in an environment of falling interest rates,” Stefan Graber, an analyst at Credit Suisse Group AG, wrote in a note today. “Yields reached very low levels in 2009 and if they turn higher we could see renewed profit-taking in the precious metals space, particularly for gold and silver.”

Among other precious metals, silver rose 1.2 percent to $17.9925 an ounce, palladium gained 1.1 percent to $424 an ounce and platinum rose as much as 1.2 percent to $1,547.75 an ounce. Platinum and palladium are used in autocatalysts and may benefit from economic expansion.

To contact the reporters on this story: Stuart Wallace in London at swallace6@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net