Gold rises in London

Gold rose on Friday, aided by firm stocks and a strike at a gold mine, as speeches by US President George W. Bush and Federal Reserve Chairman Ben Bernanke calmed financial markets ahead of the three-day US Labour Day holiday weekend.
Bush unveiled plans to help some subprime borrowers to avoid foreclosure, but warned it was not the government's job to bail out speculators. Bernanke echoed that sentiment, saying the central bank is set to act as needed to limit the impact of financial turmoil on the economy, but would not protect investors who made poor choices.
Gold rose as high as $674.30 an ounce before easing to $673.10/673.70 an ounce by 3:01 pm EDT (1901 GMT), sharply higher from the $664.70/665.50 price quoted late in New York on Thursday. "What's interesting to see is that both Bernanke and Bush made clear that they won't bail out speculators," said Heraeus trader Alexander Zumpfe. A European metals trader said there had been good buying interest ahead of the speeches.
Gold fell more than 3 percent in mid-August as global credit fears sparked a broad-based sell-off in commodities and other financial markets. A half-percentage point cut in the US Federal Reserve discount rate later helped fuel a recovery.
Gold traditionally has been used by investors as protection against economic and political uncertainty. But in recent months it has behaved much like other financial assets because of the growing role of commodities in diversified portfolios.
Bullion also got early support from news that gold production at the Lihir mine in Papua New Guinea, one of the nation's largest gold mines, had been interrupted by a strike. "The gold mine strike was the first piece of news directly related to precious metals that we've had in a long while, so it did help push prices up a bit," a Tokyo broker said.
US stocks surged more than 1 percent in afternoon trading following the reassurances from Bush and Bernanke. European and Asian shares also closed sharply higher. "Still, gold is following stocks almost precisely. It's a combination thereof," said Leonard Kaplan, president of Prospector Asset Management in Evanston, Illinois.
In top bullion consumer India, demand for gold in 2007 is likely to jump by 50 percent from 2006, to record levels as lower prices lift buying interest, an official of the industry-sponsored World Gold Council said on Thursday. "The early indications are for a very, very strong year for India's gold demand," Philip Olden, managing director and chief marketing officer of WGC, told Reuters.
In other metals, silver rose to $12.05/12.10 an ounce from $11.75/11.78 late in the US market on Thursday. Platinum was at $1,266.10/1,273.10 an ounce, up from $1,256.50/1,263.50 late in New York, while palladium climbed to $329/333 an ounce from its previous finish of $325/329.