Gold Pares Worst Week in a Month as Commodities Advance on European Plan

By Glenys Sim - Oct 21, 2011 9:23 AM GMT+0700

Gold gained for the first time in five days, trimming its worst weekly performance in a month, as optimism that European leaders have a plan to fight the region’s debt crisis drove commodities higher.

Bullion for immediate delivery rose as much as 0.6 percent to $1,629.70 an ounce and traded at $1,629.22 at 10:17 a.m. in Singapore. The metal is down 3.1 percent this week, the biggest drop since the week ending Sept. 23. December-delivery gold also gained for the first day in five, climbing as much as 1.1 percent to $1,630.90 in New York.

“Uncertainty in the gold market has led to shifts from day to day as the yellow metal moves with base metals on risk-off, trading more like a commodity, and then moves with U.S. dollars as investors seek safe-haven assets,” James Steel, an analyst at HSBC Securities USA Inc., wrote in a note. “This could continue in the short term.”

Asian stocks gained and three-month copper on the London Metal Exchange advanced for the first time in five days as two people familiar with the matter said that European governments may pool as much as 940 billion euros ($1.3 trillion) to stem the crisis. German Chancellor Angela Merkel and French President Nicolas Sarkozy said in a joint statement yesterday that they want leaders to agree on an “ambitious” plan.

Cash silver climbed 0.8 percent to $30.85 an ounce. Spot platinum gained 0.7 percent to $1,505.25 an ounce and palladium rose 1.4 percent to $595.50 an ounce.

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

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net