Gold Plateaus After Previous Gains

Gold traded little changed in Asia, ending two days of gains, on concern deteriorating company earnings in the U.S. will weigh on global growth.

U.S. equities dropped yesterday on a worsening outlook for companies including Goldman Sachs Group Inc. and Google Inc, as the government doubled the size of its bailout of American International Group Inc. Bullion gained 1.3 percent yesterday after China said it would spend $586 billion to maintain growth in the world's fourth-largest economy.

"We favor modest gold rallies but advances in bullion may be restrained by ongoing credit market tightness,'' James Steel, an analyst at HSBC Securities in New York, wrote in a note e- mailed today.

Gold for immediate delivery traded little changed at $746.72 an ounce at 2 p.m. in Singapore, after rising as much as 4.3 percent yesterday. Silver for immediate delivery was barely changed at $10.195 an ounce.

"Between August 2007 and July this year, widening credit spreads and higher London interbank offered rates were generally seen as bullish, driving prices higher as investors sought safe- haven assets,'' said Steel.

The London interbank offered rate, or Libor, for three- month U.S. dollar loans slid 5 basis points to 2.24 percent yesterday, a four-year low.

"When the credit crisis entered a more dangerous phase in July, some investors were compelled to liquidate assets, including gold,'' Steel said. "This has tended to keep bullion on the defensive right up to the present.''

Gold for December delivery also traded little changed at $745.60 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange. Gold for August delivery in Tokyo lost 1.8 percent to 2,348 yen a gram ($747 ounce) at 2:01 p.m. Singapore time.

Author: Jo Amey