Gold Little Changed as Dollar Slips Against Euro; Silver Gains

Sept. 10 (Bloomberg) -- Gold was little changed, paring an earlier decline, as the dollar slipped against the euro, boosting the metal’s appeal as an alternative asset. Silver rose.

The dollar sank as much as 0.4 percent against the European currency, erasing an earlier gain. Gold fell as much as 1.4 percent before rebounding. On Sept. 8, gold, which tends to rise when the dollar weakens, reached $1,009.70 an ounce in New York, the highest since March 2008. The price briefly topped $1,000 today, after the day’s settlement, as the greenback declined.

“Gold is gaining ground on the U.S. dollar weakness today,” Miguel Perez-Santalla, a Heraeus Precious Metals Management sales vice president in New York, said by e-mail.

Gold futures for December delivery slipped 30 cents to $996.80 an ounce on the New York Mercantile Exchange’s Comex division. The most-active contract has surpassed $1,000 in each of the past three days.

In London, bullion for immediate delivery rose $3.95, or 0.4 percent, to $996.24 an ounce at 7:10 p.m. local time, after falling as much as 1 percent earlier. Spot prices advanced 4.3 percent this month through yesterday as the euro gained 1.6 percent against the U.S. currency.

“A deeper pullback in the dollar could keep prices supported, but for sustained gains we shall need to see renewed risk aversion,” Andrey Kryuchenkov, a VTB Capital analyst in London, wrote today in a note.

Equity Indexes Rise

U.S. equity indexes advanced, a sign that investors may have a higher tolerance for risk. The benchmark Standard & Poor’s 500 Index rose as much as 1 percent, extending a September gain of 1.2 percent through yesterday.

The Bank of England plans to keep buying as much as 175 billion pounds ($291 billion) in assets to cement the economy’s recovery, according to a statement today. The U.K. central bank kept its main interest rate at 0.5 percent. Some analysts say government spending may spark accelerating inflation and currency debasement.

“Gold will remain well-supported, driven by dollar weakness, demand from China and inflation expectations,” Liam Fitzpatrick, a Citigroup Inc. analyst in London, said today in a report. The metal will trade between $900 and $1,000 an ounce, he predicted.

Ian Williams, the chief executive officer of Charteris Portfolio Managers in London, predicted gold will trade from $1,250 to $1,300 an ounce within the next six months.

“Sooner or later, you get a situation where everything is going up,” Williams said in a Bloomberg Television interview. “Gold is going up, because it’s liquidity driven.”

Silver Climbs

Silver futures for December delivery gained 20 cents, or 1.2 percent, to $16.70 an ounce. The most-active contract surged to a 13-month high of $16.86 on Sept. 8 and is up 20 percent in the past three weeks, pushing its 2009 gain to 48 percent.

Silver is “vulnerable to one of its idiosyncratic collapses,” John Reade, UBS AG’s head metals strategist in London, said today in a note. “We recommend taking any profits in silver.”

Platinum for October delivery declined $1.70, or 0.1 percent, to $1,289.70 an ounce in New York, up 37 percent this year. Credit Agricole SA’s Calyon unit in London raised its 2010 price forecast for the metal by 8.3 percent to $1,300 an ounce, citing improving economic growth. Palladium for December delivery declined $1.60, or 0.5 percent, to $293.45 an ounce.

Outperforming Gold

“We expect silver and platinum to continue to outperform gold as economic conditions improve,” Citigroup’s Fitzpatrick said in his report. Platinum, used in automotive emissions- control parts, may rise toward $1,400 an ounce by the end of the year, he wrote, citing “potential restocking in the global auto market and curtailment of supply.”

Automakers account for about 60 percent of platinum and palladium use, according to metals researcher and refiner Johnson Matthey Plc.

Tomorrow, the New York Mercantile Exchange plans to observe a moment of silence to commemorate the events of Sept. 11, 2001. In a statement today, President Barack Obama asked all Americans to pause in their activities at 8:46 a.m. New York time to honor the victims of the terrorist attacks eight years ago.