By Pham-Duy Nguyen and Claudia Carpenter

Jan. 10 (Bloomberg) -- Gold, little changed in New York, may rebound from the biggest weekly loss since July as planned Portuguese and Spanish bond sales this week revive concern that Europe’s debt crisis may linger.

The cost of insuring European sovereign debt against default increased to a record today before Portugal’s bond sale on Jan. 12 and Spain’s the following day. Gold futures gained 30 percent last year as bailouts of Greece and Ireland sent the euro down 6.5 percent against the dollar.

“When you look over your shoulders, the worries in Europe are still there,” said Frank McGhee, the head dealer at Integrated Brokerage Services in Chicago. “Another bailout in Europe means you’ll be seeing a movement out of European currencies into metals.”

Gold for February delivery rose $1 to $1,369.90 an ounce at 10:17 a.m. on the Comex in New York. Earlier, the metal gained as much as 0.5 percent and fell 0.3 percent. Gold dropped 3.7 percent last week.

The precious metal reached a record $1,432.50 on Dec. 7 and also rose to an-all time high priced in euros last month. On Jan. 3, gold priced in British pounds touched the highest ever.

Prices may get support as investors in China and India seek a hedge against inflation, said Bayram Dincer, an analyst at LGT Capital Management in Pfaeffikon, Switzerland. China’s inflation surged to 5.1 percent in November, and Indian onion prices have jumped 80 percent.

‘Inflation Hedge’

“Chinese and Indian investors will want to gain exposure to precious metals as an imperfect inflation hedge,” Dincer said by e-mail. “U.S. and European investors will want to gain exposure because of the unstable economic situation and high, unsustainable debt levels.”

Silver futures for March delivery gained 15.4 cents, or 0.5 percent, to $28.825 an ounce on the Comex, rebounding from a 7.3 percent loss last week.

On the New York Mercantile Exchange, platinum futures for April delivery increased $6.70, or 0.4 percent, to $1,745 an ounce, and palladium futures for March delivery fell 20 cents to $755.75 an ounce. Palladium dropped 5.9 percent last week and platinum fell 2.2 percent.

--Editors: Daniel Enoch, Patrick McKiernan.

To contact the reporters on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net; Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net.

Source: http://www.businessweek.com/news/2011-01-10/gold-steady-in-n-y-may-rise-as-debt-concern-spurs-demand.html