Gold Heads for Biggest Weekly Gain in 19 Months
Bloomberg

Feb. 22 - Gold, little changed in London, headed for its biggest weekly advance in 19 months as lower U.S. interest rates may revive investor demand for the metal as an alternative to the dollar. Platinum dropped from a record.

The dollar traded near a three-week low against the euro on speculation U.S. economic growth will slow, forcing the Federal Reserve to lower interest rates. Gold has climbed 45 percent since the Fed in August announced a policy shift to contain the subprime mortgage collapse.

"It's been six months this week since the Fed started cutting interest rates and gold has gone nuts," said Adrian Ash, head of research of London-based BullionVault, a gold dealer that holds about six tons of gold for customers in vaults in London, Zurich and New York. "The more the Fed promises cheaper money, the more people will choose an alternative to the dollar."

Gold for immediate delivery rose 9 cents, or less than 0.1 percent, to $946.19 an ounce as of 10:54 a.m. in London. Prices this week are up 4.8 percent, the biggest weekly advance since July 14, 2006.

Gold for April delivery dropped 40 cents to $948.80 an ounce on the Comex division of the New York Mercantile Exchange.

Assets in the StreetTracks Gold Trust, the biggest fund backed by gold, are unchanged since early February.

"Any correction will see a very sharp drop in the price because the supply/demand factors are not in favor of gold," said Manqoba Madinane, a commodities analyst at Standard Bank Plc in Johannesburg.

India Imports

Gold imports in India, the world's biggest gold consumer, have slumped every month since October, according to figures from the Bombay Bullion Association. Gold has risen every month except November for the past seven months.

"Technical analysts, who follow momentum, are generally more bullish than fundamentalists who fret about declining physical demand at higher levels," the World Gold Council's Exchange Traded Gold said in a filing to the U.S. Securities and Exchange Commission yesterday. "With gold trading in the $900 to $950/ounce range, a price of $1,000 is an easy target for the bulls."

Platinum for immediate delivery fell $27 to $2,141.50 an ounce, 2.9 percent off the record set in Asia today. Prices have soared 40 percent this year as power cuts in South Africa disrupted mining supplies from the world's biggest producer.

Silver climbed 3.5 cents to $17.91 an ounce and palladium dropped $11 to $500.

The UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials is up 14 percent this year, led by gains in lead, sugar, soybean oil and copper.

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