Gold Rebounds From Lowest Level in Six Months Heading for 11th Annual Gain

Gold, poised for an 11th year of advance, rebounded from the lowest level in six months as a slump that threatened to tip the metal into a bear market spurred purchases, tempering the effect of a stronger dollar. Immediate-delivery gold climbed as much as 0.9 percent to $1,560 an ounce and was at $1,555.30 by 1:01 p.m. in Singapore, up 9.5 percent in 2011. Holdings in exchange-traded (.GLDTONS) products, which reached a record 2,360.81 metric tons on Dec. 14, increased for a second day yesterday to 2,326.998 tons, according to data compiled by Bloomberg. February-delivery bullion rose as much as 1.3 percent to $1,561 an ounce, snapping a six-day losing streak which was the longest since March 2009. It last traded at $1,556.30 on the Comex in New York. Futures are 9.5 percent higher this year. Spot gold is on track of the longest bull run since at least 1920 as investors seek to hedge against weakening currencies, declining equities and rising inflation. Bullion reached a record $1,921.15 on Sept. 6, and would need to close below $1,536.92 to enter a bear market, typically defined as a drop of more than 20 percent from a recent high. In October 2008, gold tumbled 17 percent as the worst recession since the Great Depression sent global equity and commodity markets tumbling. The metal jumped 22 percent in the next two months. Still, bullion is 4.2 percent lower this quarter for its first quarterly drop since the three months to September 2008, after the fall of Lehman Brothers Holdings Inc.