Gold gains as euro crisis boosts investor demand

Gold gained for the first time in four days in London as concern about Europe's debt crisis boosted demand for the metal as a protection of wealth. Holdings in gold-backed exchange-traded products gained 27.5 metric tons last week, the most since August, and to within 1 per cent of the record set almost three months ago, data compiled by Bloomberg show. US Treasury Secretary Timothy F. Geithner said Europe remains the "central challenge" to growth. "The European sovereign crisis is not going away," Edel Tully, an analyst at UBS AG in London, wrote yesterday in a report. "The likelihood of recession in Europe next year, a global growth shortfall, and uncertainties surrounding monetary and fiscal policies generally help gold's cause. But they also add much volatility." Bull market Immediate-delivery gold gained $6.60 (Dh24.24), or 0.4 per cent, to $1,765 an ounce by 11.21am in London. Prices were up 0.6 per cent after dropping to a one-week low of $1,736.75 on Thursday. Gold for Dec-ember delivery was up 0.4 per cent at $1,765.80 on the Comex in New York. The metal rose to $1,764 an ounce in the morning "fixing" in London, used by some mining companies to sell output, from $1,756 at Thursday's afternoon figure. Bullion is in the 11th year of a bull market and prices reached a record $1,921.15 an ounce on September 6 as investors sought to diversify away from equities and some currencies. Twenty-one of 22 traders and analysts surveyed by Bloomberg expect bullion to rise this week, the third consecutive increase and the highest proportion in data going back to April 2004. Yields on Italian and Greek bonds rose to euro-era records last week amid concern about Europe's debt crisis. The Eurozone "is not going to resolve the debt issue next week or month," Gavin Wendt, the founder and senior resource analyst at Sydney-based Mine Life Pty., said by phone yesterday. "It's going to be a problem for many years to come and gold is always seen as an insurance policy for investors."