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Gold Rises in London on Demand for Alternative to Slumping Euro

Dec. 20 (Bloomberg) -- Gold rose in London on demand for an alternative investment to the slumping euro.

The euro fell against 14 of 16 currencies as the European Central Bank warned of “concerns” about Irish legislation to fix its banking system. Gold assets in exchange-traded products, or ETPs, rose 0.7 percent to a record 2,113.2 metric tons as of Dec. 17, according to data collected by Bloomberg from 10 providers. Gold prices have jumped 26 percent this year as ETP holdings climbed almost 18 percent.

“Gold prices are being supported by strong ETF demand,” Commerzbank AG analyst Carsten Fritsch said in a report e-mailed today.

Immediate-delivery bullion gained $8.75, or 0.6percent, to $1,384.20 an ounce at 12:24 p.m. London time. The February-delivery contract rose $3.20, or 0.2 percent, to $1,382.40 an ounce on the Comex in New York.

The metal is set for a 10th annual gain, as a sovereign-debt crisis in Europe and so-called quantitative easing in the U.S. hurt currencies and aided demand for the metal as an alternative investment to currencies. The price reached a record $1,431.25 an ounce on Dec. 7.

Baker Steel Capital Managers LLP, a London-based firm managing about $1.7 billion, plans a gold fund that will hold gold and shares of producers, according to Managing Partner David Baker.

Silver for immediate delivery climbed 6.44 cents, or 0.2 percent, to $29.2169 an ounce. Spot palladium added $7.25, or 1 percent, to $747 an ounce and immediate-delivery platinum gained $4, or 0.2 percent, to $1,703.50 an ounce.

To contact the reporter on this story: Tony C. Dreibus in London at tdreibus@bloombeg.net

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

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