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Fri 19 Nov 2010 03:24 PM

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Gold Rises for first day in three as weaker dollar stokes investor demand

Buyers are valuing these price levels as a good opportunity in longer time horizon

Gold Rises for first day in three as weaker dollar stokes investor demand
\nAnalyst believe short term uncertainty about the US dollar is supporting prices (Getty Images)

Gold climbed for the first time in three days in New York as a weaker dollar boosted demand for an alternative investment.

The euro rose against the dollar on optimism a bailout for Ireland will prevent contagion across the region’s larger debt markets, and before a report that may show US initial jobless claims rose last week.

Bullion, which typically moves inversely to the greenback, slumped 4.7 percent in the four days through yesterday. It reached a record $1,424.30 an ounce on November 9.

An analyst at LGT Capital Management in Pfaeffikon, Switzerland Bayram Dincer said: “Short term uncertainty about the US dollar is supporting prices.  Opportunistic buyers with a longer time horizon are valuing these price levels as a good opportunity.”

Gold futures for December delivery added $18.30, or 1.4 percent, to $1,355.20 an ounce at 8 am on the Comex in New York. The metal for immediate delivery in London was 1.5 percent higher at $1,355.68.

Bullion rose to $1,356.75 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,337.50 at yesterday’s afternoon fixing.

Irish Finance Minister Brian Lenihan said the government is prepared to ask for a rescue package for its banks. European policy makers will scan the books of Ireland’s debt-laden banks to determine whether the government can fix the banking system on its own or needs to fall back on the $1 trillion European Financial Stability Fund.

Irish central bank Governor Patrick Honohan said he expects the country to ask for a “substantial” bailout from the European Union and the International Monetary Fund.

A US Labor Department report today will show the number of Americans filing initial jobless claims increased 6,000 last week, according to the median forecast of economists in a Bloomberg News survey.

Silver probably will top $30 an ounce in 2011 on demand by investors seeking a protection of wealth, London based research firm GFMS Ltd. said in a report today. The metal will average $19.94 an ounce this year and about $28 next year, GFMS said. Futures have averaged about $19.13 so far this year.

Silver for December delivery in New York gained 4.2 percent to $26.57 an ounce. It reached a 30 year high of $29.34 last week and is up 58 percent this year.

Palladium for December delivery climbed 4.4 percent to $683.90 an ounce. Platinum for January delivery was 0.7 percent higher at $1,653.50 an ounce after falling the previous two days. The metal yesterday slipped to $1,628, the lowest level since September 28.

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