Gold Set to Gain in New York on Speculation About More Stimulus

Gold was set to gain in New York on speculation central banks may take more action to stoke growth.

The euro-area economy contracted in the second quarter after the worsening debt crisis and tougher budget cuts forced at least six nations into recessions, the European Union’s statistics office in Luxembourg said today. Gold reached $1,629.70 an ounce on Aug. 10, the highest since July 31, on speculation central banks will need to take more action.

“It looks like the gold market will continue to be held up by the sentiment of expected central-bank stimulation,” Marex Spectron Group said in a report today. “The downside risk is limited.”

Gold for December delivery rose 0.2 percent to $1,615 an ounce by 8:03 a.m. on the Comex in New York. Bullion for immediate delivery was 0.2 percent higher at $1,612.60 in London.

Holdings in bullion-backed exchange-traded products fell 1.1 metric ton from a record to 2,416.2 tons yesterday, data compiled by Bloomberg show. Gold prices are up 3 percent this year after 11 consecutive annual increases.

Europe’s slump is deepening as governments struggle to restore investor confidence in their ability to plug budget deficits as some of the region’s largest companies including Deutsche Bank AG eliminate jobs. In Germany, investor confidence unexpectedly dropped for a fourth month in August and the Bank of Japan’s minutes of the July 11-12 meeting released today cited the euro-area crisis among risks.

Silver Advance

Silver for September delivery rose 0.2 percent to $27.81 an ounce. Palladium for September delivery gained 0.8 percent to $579.20 an ounce. Platinum for October delivery was 0.8 percent higher at $1,404.40 an ounce. Gold’s premium to platinum was at 14.7 percent in London today. It settled at 16 percent yesterday, the most since at least 1987 based on closing prices, data compiled by Bloomberg show.

At least nine people were killed, including two policemen, during four days of violent clashes at Lonmin Plc’s mines in South Africa’s North West province. The third-largest platinum producer’s Marikana complex was operating with low worker attendance today, Barnard Mokwena, executive vice president of human capital at Johannesburg-based Lonmin, said today. There were no incidents of attacks overnight, he said.

To contact the reporters for this story: Nicholas Larkin in London at nlarkin1@bloomberg.net

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

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