June 21 (Bloomberg) -- Gold may gain for a sixth day in New York as a weaker dollar and concern about Europe’s debt crisis spur demand for an alternative investment.
The dollar fell against six major currencies before a report forecast to show U.S. home sales dropped in May to this year’s low. Greek Prime Minister George Papandreou faces a confidence vote in his government today that may determine whether Greece becomes the first euro-area country to default.
“The softer dollar tone has lent some support to the precious complex,” James Moore, an analyst at TheBullionDesk.com in London, said today in a report. “Greece looks set to be the focus of attention.”
Gold for August delivery rose $3.60, or 0.2 percent, to $1,545.60 an ounce by 7:59 a.m. on the Comex in New York. A sixth consecutive rise would be the best streak of gains since April. Immediate-delivery gold was 0.3 percent higher at $1,544.65 in London.
Bullion fell to $1,543 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,544 at yesterday’s afternoon fixing.
The International Monetary Fund, contributor of a third of the bailout money for Greece, Ireland and Portugal, has warned European leaders that a failure to take decisive action on the debt crisis risks triggering “large global spillovers.” At the same time, Papandreou is struggling to convince Greeks to accept a 78 billion-euro ($112-billion) package of state-asset sales and budget cuts, which include a “crisis levy” on wages.
Europe’s Debt Crisis
Gold is up 8.7 percent in 2011 after climbing the past 10 years, the longest run of gains in at least nine decades in London. Europe’s debt crisis helped bullion futures reach a record $1,577.40 on May 2. The metal touched an all-time high priced in British pounds yesterday and is trading 1.2 percent from its peak in euros.
Gold is “holding near record highs as there is no quick end in sight to economic turmoil in Europe,” GoldCore Ltd. analysts in Dublin said in a report. “All fiat currencies are now vulnerable to currency debasement and devaluation. Focusing on gold solely in U.S. dollar terms remains simplistic and misleading.”
Bullion may average $1,500 an ounce this year and $1,550 in 2012, the Australian Bureau of Agricultural and Resource Economics and Sciences said in a report today. The metal has averaged $1,445 so far in 2011.
“Uncertainty about the ability of many developed economies to stimulate economic growth and control growing budget deficits is expected to encourage investment demand for gold as a lower risk, or safe haven, asset,” the Canberra-based agency said.
Silver for July delivery gained 0.5 percent to $36.255 an ounce in New York. Holdings of the metal in exchange-traded products declined 13.6 metric tons to 13,551.9 tons yesterday, the lowest level since September.
Palladium for September delivery rose 0.9 percent to $755 an ounce. Platinum for July delivery was 0.9 percent higher at $1,746.20 an ounce.
--With assistance from Jason Scott in Perth. Editors: John Deane, Dan Weeks
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