Gold rose for a fourth day in New York, climbing above $1,200 an ounce on speculation that investors will increase purchases of the precious metal as a means of protecting wealth.
The euro rebounded against the dollar before stress-test results today that may reveal loan losses at European banks. Gold, trading at the highest price in a week, is set for its biggest weekly increase since the five days ended June 18.
“The dip-buying interest seen in gold over the past few days is an encouraging indicator and suggests ongoing diversification from fiat currencies by investors looking for more tangible assets,” said James Moore, an analyst at TheBullionDesk.com in London. “We could see a volatile close tonight” as the stress-test results are released, he said.
Gold futures for August delivery added $4.60, or 0.4 percent, to $1,200.20 an ounce at 8:28 a.m. on the Comex in New York. Prices are up 1 percent this week. Gold for immediate delivery in London was 0.5 percent higher at $1,201.
Bullion fell to $1,198.75 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,199.50 at yesterday’s afternoon fixing. The dollar slid as much as 0.6 percent.
Gold futures are up 9.1 percent this year and set a record $1,266.50 an ounce on June 21 as investors sought to protect their wealth against the European debt crisis and on concern that the global economy may slow. Results from the European Union’s bank stress tests may be published starting at 6 p.m. Brussels time today as regulators determine whether lenders can survive possible losses on sovereign-debt holdings.
Assets in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, fell 6.08 metric tons to 1,302.05 tons yesterday, according to the company’s website. Global holdings of the metal by ETFs declined 7.1 tons to 2,064.6 tons yesterday, according to Bloomberg data from 10 providers.
“Gold has currently lost the support which helped drive prices to a record,” Wang Huijia, an economist at China Merchants Futures Co., said from Guangzhou. “The Europe debt crisis seems to have calmed down; however, gold’s declines will be limited, as a resolution is far from over.”
The euro gained against the dollar after Ifo institute data showed German business confidence unexpectedly surged to a three-year high in July after exports boomed and economic growth accelerated. The U.K. economy expanded almost twice as much as economists forecast in the second quarter, the Office for National Statistics said today.
Twelve of 27 traders, investors and analysts surveyed by Bloomberg, or 44 percent, said bullion will rise next week. Seven forecast lower prices and eight were neutral. Gold will average $1,205 this year, up from a previous estimate of $1,129, according to UBS AG. It has averaged $1,159.70 so far.
“We believe the spotlight will return to focus on sovereign-debt burdens in Europe and beyond,” UBS analysts including Edel Tully said in a report dated yesterday. “The fear of further debasement of fiat currencies follows closely. In turn, we expect the fear trade” will increase in the second half and into next year, the analysts said.
Silver for September delivery in New York rose 0.6 percent to $18.23 an ounce. Platinum for October delivery gained 1 percent to $1,544.80 an ounce. Palladium for September delivery was 0.9 percent higher at $461 an ounce.