Bankruptcy Q Players

[the cork]

Gold May Gain on Debt Rating, China Credit Tightening Concern

By Nicholas Larkin and Glenys Sim

March 15 (Bloomberg) -- Gold, little changed in New York today, may gain as debt rating concerns and the prospect of credit tightening in China prompt some investors to seek a haven in precious metals.

The U.S. and the U.K. have moved “substantially” closer to losing their AAA credit ratings as the cost of servicing their debt rose, said Moody’s Investors Service. Economists from Morgan Stanley said they expect “multiple” increases in China’s bank-reserve ratio requirements, with the next one “imminent.”

“Speculation both the U.K. and U.S. could lose their AAA- credit ratings should act to underpin” precious metals, James Moore, an analyst at TheBullionDesk.com in London, said in a report.

Gold futures for April delivery added $3.60, or 0.3 percent, to $1,105.30 an ounce at 8:17 a.m. on the Comex in New York. The metal dropped 3 percent last week. Gold for immediate delivery in London was 0.3 percent higher at $1,105.44.

Bullion declined to $1,104 an ounce in the morning “fixing” in London, used by some mining companies to sell production, from $1,106.25 at the afternoon fixing on March 12.

China’s policy makers are seeking to sustain economic growth, driven by stimulus and looser credit that led to a construction boom, without stoking prices of stocks and property. The country’s central bank has already twice raised this year the amount of deposits banks must hold in reserve, after guiding three-month and one-year bill yields higher.

China Rates, Ratios

“China will raise interest rates and continue to increase the reserve requirement ratio” for banks, said Wu Zhengzheng, analyst at China International Futures Co. (Beijing). “Gold will be supported as long as uncertainties about the economy remain.”

The dollar rose 0.4 percent against the euro as German Finance Minister Wolfgang Schaeuble and French Finance Minister Christine Lagarde damped speculation at the weekend that there will be a decision on aid for Greece at a two-day meeting in Brussels starting today.

Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by the metal, were unchanged at 1,115.51 metric tons on March 12, according to the company’s Web site.

Silver for May delivery in New York lost 0.1 percent to $17.03 an ounce. Platinum for April delivery added 0.4 percent to $1,615.50 an ounce. Palladium for June delivery was little changed at $463 an ounce.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aeBKh.gjMzKg