Gold Rises on Demand for Haven as Fed Indicates U.S. Recovery Is Faltering
Gold futures rose on demand for a haven after the Federal Reserve said the U.S. economy is slowing.
The “pace of economic recovery is likely to be more modest in the near term than had been anticipated,” the Federal Open Market Committee said yesterday in a statement. Gold has gained 43 percent since the end of 2007 amid a global credit crisis and recession.
“Fear is coming back into the market, and that’s creating a movement into gold,” said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago.
Gold futures for December delivery climbed $1.20, or 0.1 percent, to $1,199.20 an ounce to close at 1:54 p.m. on the Comex in New York. The metal reached a record $1,266.50 on June 21.
Futures also climbed as the Fed said it would buy more U.S. government debt, reversing plans to exit from aggressive monetary stimulus.
“Gold is well supported by long-term inflationary concerns after the shift in policy by the Federal Reserve,” said Ong Yi Ling, an investment analyst at Phillip Futures Pte. in Singapore.
The metal fluctuated between gains and losses as the dollar jumped. The greenback climbed as much as 2 percent against a basket of six currencies, eroding the appeal of commodities as alternative investments.
Silver futures for September delivery declined 25.6 cents, or 1.4 percent, to $17.902 an ounce.
Platinum and palladium, used in jewelry and pollution- control devices in cars, were down for the seventh straight session.
Platinum futures for October delivery fell $16.40, or 1.1 percent, to $1,520.60 an ounce on the New York Mercantile Exchange, marking the longest slump since July 2008.
Palladium futures for September dropped $5.90, or 1.3 percent, to $464.70 an ounce, capping the longest slide since January.
To contact the reporter on this story: Millie Munshi in New York at mmunshi@bloomberg.net.
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