Gold Prices Rise in N.Y. on Demand for Alternative to Currency

March 15 (Bloomberg) -- Gold rose in New York, rebounding from the biggest weekly loss in more than a month, on speculation that sovereign-debt concerns will boost demand for the metal as an alternative to holding currency.

The euro fell as much as 0.9 percent against the dollar after the finance ministers of Germany and France ruled out a decision today on helping Greece manage its fiscal difficulties. Moody’s Investors Service said the U.S. and the U.K. have moved closer to losing their Aaa credit ratings.

“Gold is a good spot to be parking your money for the time being,’ said Frank Lesh, a trader at FuturePath Trading LLC in Chicago. “Gold has that flight-to-safety aspect to it. It’s going to hold its value.”

Gold futures for April delivery rose $3.70, or 0.3 percent, to $1,105.40 an ounce on the Comex in New York. The metal fell 3 percent last week, the most since Jan. 22.

Greece is seeking to narrow a budget deficit that is the widest gap among the 16 nations that share the euro. Gold priced in euros reached a record on March 5.

Under a so-called baseline scenario, the U.S. will spend more on debt service as a percentage of revenue this year than any top-rated country except the U.K., Moody’s said today in a report. The U.S. will be the biggest spender through 2013.

“Jitters lent fresh support to the precious metals,” said Jon Nadler, a Kitco Inc. analyst in Montreal.

China Rate Concern

Gold’s gains may be limited on concern that China will raise its benchmark one-year lending rate, curbing demand for raw materials. The Reuters/Jefferies CRB Index of 19 commodities fell as much as 1.3 percent after a 1.3 percent loss last week.

“Most countries are reluctant to raise interest rates at this point,” said Lesh of FuturePath. “They don’t know if their economies can handle it. But China has been tightening and they can move quickly.” The Asian nation’s central bank increased reserve requirements for lenders last month.

In other markets, silver futures for May delivery advanced 6 cents, or 0.4 percent, to $17.108 an ounce on the Comex. Platinum for April delivery rose $7.40, or 0.5 percent, to $1,615.80 an ounce on the New York Mercantile Exchange. June palladium futures slid $2.50, or 0.5 percent, to $460.65 an ounce on the Nymex.