Gold Climbs ...small uptick comingGold Climbs as Euro Advances Against the Dollar; Silver Rises
By Claudia Carpenter
May 23 (Bloomberg) -- Gold advanced in London as the euro extended gains against the dollar, reviving demand for the precious metal as an alternative investment. Silver also gained.
Gold dropped $4, or 0.6 percent, yesterday, partly on news that Spain's central bank sold some of the metal, Standard Bank Plc said in an e-mailed report today. Gold had dropped as much as $1.70 before the euro advanced against the dollar.
``Gold is rebounding a little bit now as the euro is back at the day's high,'' said Mario Innecco, a futures broker specializing in precious metals and fixed income at Man Financial Ltd. in London.
Gold for immediate delivery rose $3.10, or 0.5 percent, to $662.35 an ounce at 12:58 p.m. local time. Silver gained 5 cents to $13.02 an ounce.
The dollar had gained against the euro every day this week, extending a three-week advance. Gold has moved opposite the dollar against the euro 75 percent of the time this year.
Central banks may have been selling through the London market, Innecco said. The European Central Bank said yesterday three unidentified member banks last week sold gold worth 280 million euros ($376 million), the most since the week ended April 20.
``We would not be surprised if the recent large sales by the Bank of Spain are continuing,'' UBS AG's London-based analyst John Reade said in an e-mailed report today.
Spain may be selling gold to make up for a widening current- account deficit, Innecco said. Spain's current account, a broad measure of trade that includes exports, services and investment income, was a negative 8.98 billion euros in February compared with a negative 8.62 billion euros in January, the Bank of Spain said last week. A Bank of Spain spokesman who declined to be identified said the gold sales respect the agreement signed by European central banks to limit sales.
Last year, Spain reduced its gold reserves to 13.4 million ounces from 14.72 million ounces, according to the International Monetary Fund.
To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net .
Last Updated: May 23, 2007 07:59 EDT