Gold Rises for First Day in Three as Weaker Dollar Stokes Investor Demand

Gold climbed for the first time in three days in New York as a weaker dollar boosted demand for an alternative investment.

The euro rose against the dollar on optimism a bailout for Ireland will prevent contagion across the region’s larger debt markets, and before a report that may show U.S. initial jobless claims rose last week. Bullion, which typically moves inversely to the greenback, slumped 4.7 percent in the four days through yesterday. It reached a record $1,424.30 an ounce on Nov. 9.

“Short-term uncertainty about the U.S. dollar is supporting prices,” said Bayram Dincer, an analyst at LGT Capital Management in Pfaeffikon, Switzerland. “Opportunistic buyers with a longer time horizon are valuing these price levels as a good opportunity.”

Gold futures for December delivery added $18.30, or 1.4 percent, to $1,355.20 an ounce at 8 a.m. on the Comex in New York. The metal for immediate delivery in London was 1.5 percent higher at $1,355.68.

Bullion rose to $1,356.75 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,337.50 at yesterday’s afternoon fixing.

Irish Finance Minister Brian Lenihan said the government is prepared to ask for a rescue package for its banks. European policy makers will scan the books of Ireland’s debt-laden banks to determine whether the government can fix the banking system on its own or needs to fall back on the 750-billion-euro ($1 trillion) European Financial Stability Fund.

‘Substantial’ Bailout

Irish central bank Governor Patrick Honohan said he expects the country to ask for a “substantial” bailout from the European Union and the International Monetary Fund.

A U.S. Labor Department report today will show the number of Americans filing initial jobless claims increased 6,000 last week, according to the median forecast of economists in a Bloomberg News survey.

Silver probably will top $30 an ounce in 2011 on demand by investors seeking a protection of wealth, London-based research firm GFMS Ltd. said in a report today. The metal will average $19.94 an ounce this year and about $28 next year, GFMS said. Futures have averaged about $19.13 so far this year.

Silver for December delivery in New York gained 4.2 percent to $26.57 an ounce. It reached a 30-year high of $29.34 last week and is up 58 percent this year.

Palladium for December delivery climbed 4.4 percent to $683.90 an ounce. Platinum for January delivery was 0.7 percent higher at $1,653.50 an ounce after falling the previous two days. The metal yesterday slipped to $1,628, the lowest level since Sept. 28.

To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Jae Hur in Tokyo at jhur1@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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