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Gold May Climb for a Fourth Day on European Crisis Concern, China Imports

Gold may rise for a fourth day in New York as concern about Europe’s debt crisis spurs demand for a protection of wealth and as China’s bullion imports surged. Palladium climbed to a nine-year high.

China’s gold imports jumped almost fivefold in the first 10 months from the entire amount last year as concern about rising inflation increased gold’s appeal, the Shanghai Gold Exchange said. The dollar fell against the euro as the European Central Bank left interest rates at a record low and as investors waited to see if the bank will expand stimulus measures to fight the region’s debt crisis. Gold futures reached a record $1,424.30 an ounce on Nov. 9.

“While the return of risk appetite hasn’t crimped gold’s safe-haven appeal, decent resistance is blocking the yellow metal’s return to $1,400,” Edel Tully, an analyst at UBS AG in London, said in a report. “Market attention today will be focused on the European Central Bank meeting,” and the Chinese import comments “have added to gold’s appeal,” she said.

Gold futures for February delivery added $1.10, or 0.1 percent, to $1,389.40 an ounce at 8:01 a.m. on the Comex in New York. Prices yesterday reached $1,398.30, the highest level since Nov. 12. The metal for immediate delivery in London was 0.1 percent higher at $1,389.18.

Bullion rose to $1,390 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,385.50 at yesterday’s afternoon fixing.

The euro this week fell to a two-month low versus the dollar as concern deepened that the region’s debt crisis would spread. Policy makers today kept their benchmark rate at 1 percent. ECB President Jean-Claude Trichet will hold a press conference in Frankfurt from 8:30 a.m. New York time.

China Imports Gain

China’s imports gained to 209 metric tons compared with 45 tons for all of 2009, Shen Xiangrong, chairman of the bourse, told a conference in Shanghai today. The country is the world’s largest bullion producer and the second-biggest user. Investment demand in China may reach 150 tons this year, up from 105 tons last year, Albert Cheng, managing director of the World Gold Council’s Far East department, told a conference in Shanghai today.

“People there need to buy gold to hedge against inflation as the country’s tightening monetary policy drives investors from stocks and properties to gold,” said Hiroyuki Kikukawa, general manager of research at IDO Securities Co. in Tokyo. China’s demand will continue to grow, making the country one of the top importers together with India, he said.

Gold Assets

Gold assets in exchange-traded products rose 7.65 tons to 2,094.48 tons yesterday, the highest amount since Oct. 27, according to data compiled by Bloomberg from 10 providers. Holdings reached a record 2,104.65 tons on Oct. 14. Silver holdings gained 71.45 tons to 14,851.49 tons, data from four providers show.

Silver for March delivery in New York added 0.1 percent to $28.45 an ounce. The metal is up 69 percent this year and yesterday touched $28.88, the highest level since Nov. 9, when it reached a 30-year high of $29.34.

Palladium for March delivery rose as much as 3.1 percent to $754.75 an ounce, the highest price since April 2001, and was last at $741. Platinum for January delivery was 1.3 percent higher at $1,706.70 an ounce.

Platinum and palladium are used to make pollution-control devices for cars. U.S. sales of light vehicles rose 17 percent in November, Autodata Corp. said yesterday. The seasonally adjusted annual sales rate was 12.3 million, matching the October rate that was the fastest since the U.S. government’s “cash for clunkers” program in 2009.

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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