Gold Climbs as Investors Seek Haven From Global Equity Decline...

Gold Climbs as Investors Seek Haven From Global Equity Decline
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By Glenys Sim

Jan. 13 (Bloomberg) -- Gold advanced in Asia as a drop in global equities prompted investors to seek the precious metal as a haven investment. Platinum fell.

Bullion also gained as some investors deemed its slump yesterday excessive. Gold fell the most in six weeks as a rising dollar and plunging commodity costs reduced demand for an inflation hedge. Today the MSCI Asia Pacific Index dropped the most in a month on speculation companies' earnings will trail analysts' estimates.

``It was a big drop last night so we're seeing a bit of buying this morning,'' Wallace Ng, precious metals trader at Fortis Bank in Asia Pacific, said today by phone from Hong Kong. ``The market has been trading in a tight $820-$880 range in the past month as the dollar continues to strengthen.''

Bullion for immediate delivery climbed as much as 0.8 percent to $827.30 an ounce, before trading at $826.25 at 10:45 a.m. in Singapore. Gold for February delivery was 0.6 percent higher at $826 in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.

``Physical buying is less than people expected, definitely less than this time last year,'' said Ng. ``At least until the Chinese New Year, gold will trade in the $780 to $850 range.''

The dollar rose to near a one-month high against the euro as traders raised bets the European Central Bank will reduce interest rates. The currency was at $1.3323 per euro from $1.3362 yesterday in New York, when it touched $1.3289, the highest since Dec. 12.

Platinum Falls

Platinum for immediate delivery was down 1.2 percent at $946.50 an ounce, extending yesterday's 3.5 percent decline, as a slowdown in auto sales trimmed demand for the metal.

China vehicle sales may climb about 5 percent this year, the slowest pace since 1998, as a cooling economy and rising job insecurity damp demand, the China Association of Automobile Manufacturers said yesterday.

``China is the second-largest auto market in the world and until the middle of last year, robust demand acted as a counterweight to declining auto sales in North America and elsewhere,'' James Steel, an analyst at HSBC Securities in New York, said in a report e-mailed today.

Sales of cars, trucks and busses increased 6.7 percent last year to 9.38 million, the group, which represents automakers active in the country, said in a statement today. A year earlier, sales jumped 22 percent.

``The gloomy outlook for auto sales is a negative for both platinum and palladium demand and helps explain recent price weakness,'' said Steel. ``Without a recovery in Chinese demand, the platinum group metals will be hard pressed to rally.''

Among other precious metals for immediate delivery, silver was little changed at $10.68 an ounce, and palladium slipped 0.7 percent to $185.25 an ounce as of 10:30 a.m. in Singapore.

To contact the reporter on this story: Glenys Sim in Singapore at [email protected]

Last Updated: January 12, 2009 21:54 EST