Aug. 7 (Bloomberg) -- Gold advanced in London for a second day as property and credit-market losses reported by banks and insurers spurred demand for the precious metal as a haven against turmoil in financial markets. Platinum was unchanged.

Barclays Plc, the U.K.'s third-biggest bank, took credit- related writedowns of 2.8 billion pounds ($5.5 billion) in the first half and American International Group Inc. had a third straight quarterly loss related to the housing crisis. Gold is poised for ``short term gains'' as financial sector ``concerns'' intensify, according to a UBS AG report yesterday.

``We are always talking about debt problems, they are huge and they are getting out of control,'' said Florian Siegfried, executive vice president of Zurich-based Asty Capital AG, which has helped raise $2.3 billion for mining mergers. ``Gold will become a store of value again instead of paper currencies.''

Gold for immediate delivery rose $2.55, or 0.3 percent, to $882.35 an ounce by 10:45 a.m. in London after gaining $5.40 yesterday. Gold rose to a record $1,032.70 an ounce in March after Bear Stearns Cos. accepted a buyout from JPMorgan Chase & Co. to avoid collapse.

Gold's decline of about $100 since mid-July has helped demand from jewelers, the biggest buyers, to ``improve sharply over the past week,'' UBS London-based analyst Daniel Brebner wrote in the report yesterday. ``If jewelry demand remains strong then this may present a tactical buying opportunity.''

Jewelry is the biggest use for gold, and India is the largest buyer.

UBS today cut its three-month gold forecast to $900 an ounce, from $1,050.

Rupee Strengthens

The Indian rupee rose for a third day, its best run in almost three weeks, making it cheaper for buyers in India to buy gold. Gold priced in India's currency fell yesterday to 37,151 rupees an ounce, the lowest since May 14.

``It's a side story,'' said Gerry Celaya, chief strategist at Scotland-based Redtower Ltd., in an interview in London today. Gold will probably fall to $800 by the first quarter of next year as the dollar gains against the euro, eroding demand for the metal as an alternative to the U.S. currency, he said. ``A lot of people believe the dollar is a doomed currency. We've always said that's probably not going to happen.''

Platinum was unchanged at $1,604.50 an ounce after rising almost 2 percent yesterday after Xstrata Plc bid $9.8 billion for London-based platinum producer Lonmin Plc. Prices will trade higher in the next month and in three months after speculators reduced their holdings, UBS's Brebner wrote in the report.

Global platinum supplies will fall short of demand by about 500,000 ounces this year, Xstrata said yesterday. Lonmin reduced its 2008 production forecast for platinum by 10,000 ounces to 725,000 ounces because of equipment repairs.

Silver climbed 8.5 cents to $16.64 an ounce, palladium advanced $2.25 to $356.25 an ounce and rhodium dropped $100 to $7,750. Investors should ``avoid silver and palladium'' and ``we are unreservedly negative about the prospects for rhodium,'' UBS said. Rhodium, platinum and palladium are used in auto catalysts to reduce noxious fumes from vehicle exhausts.

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

Last Updated: August 7, 2008 06:01 EDT