Gold May Gain for Second Straight Day on Slowdown, European Debt Concerns

Gold may advance for a second day as further signs of a global economic slowdown and protracted sovereign-debt concerns in Europe spurred demand for precious metals as a store of value.

Immediate-delivery gold traded little changed at $1,497 per ounce at 12:42 p.m. in Singapore after gaining as much as 0.3 percent to $1,500.82. Gold for June delivery in New York was also little changed at $1,497 an ounce, while silver futures jumped as much as 1.8 percent to $35.71 an ounce, extending yesterday’s 4.8 percent advance.

Japan’s economy shrank more than estimated in the first quarter after the March 11 earthquake and tsunami, sending the nation into its third recession in a decade, data showed today. Malaysia’s growth unexpectedly eased last quarter as services and manufacturing moderated, according to data yesterday. The dollar fell for a fourth day, losing 0.3 percent against a basket of six major currencies. Gold typically moves counter to the dollar.

“A weaker dollar is proving the main driver shoring up demand for gold,” said Park Jong Beom, a Seoul-based trader at Tongyang Futures Co. “Lingering concerns over Europe’s debt issues and signs of economic slowdown are also supporting precious metals as a haven asset.”

European Central Bank officials ruled out a Greek debt restructuring, clashing with political leaders over a solution to the crisis. EU finance ministers for the first time this week floated the idea of extending Greece’s debt-repayment schedule as the nation struggles to meet the terms of last year’s 110 billion-euro ($157 billion) rescue.

Decade-Long Rally

Gold strengthened 5.4 percent this year after a 30 percent rally in 2010, keeping it on course for an 11th straight annual advance as investors seek protection against the prospect of currency debasement and accelerating inflation.

Gold and silver may decline next year as governments and central banks raise interest rates and end stimulus measures, Natixis Commodity Markets Ltd. said in an e-mailed report. Gold will average $1,140 an ounce in 2012, while silver will average $19.80, according to yesterday’s report.

Immediate-delivery platinum gained as much as 1.3 percent to $1,792 an ounce and last traded at $1,784, while palladium advanced as much as 0.7 percent to $740.25 an ounce before trading at $736.25.